Verizon Not Sweating Metromedia

Communications Today, March 20, 2002

Metromedia Fiber Network's [MFNX] declaration this week that it might have to file for bankruptcy if it cannot restructure its debt will have little effect on Verizon Communications [VZ], though Verizon owns a 9.5 percent stake in the fiber-optic network company, an analyst tells Communications Today.

On Monday, Metromedia withdrew its previous guidance and deferred the payment of about $30 million of interest due on $975 million of convertible notes issued to Verizon. The fiber company also said it hopes to restructure its debts, but could give no assurance that it would be able to do so.

[Metromedia's deferment] is a very small impact on [Verizon's] income statement, so it's not going to make much difference in [Verizon's] earnings the rest of the year," Dan McBride, a senior analyst with Detroit-based H&R Block Financial Advisors, told Communications Today on Tuesday. "I don't expect any changes in the arrangement." This past month, Verizon posted a 2001 fourth- quarter loss, including one-time costs, of $2 billion on mostly flat revenue growth of one percent. >TK