S&P releases Credit Rating Report

Fiber Optics Weekly Update, August 23, 2002

More than three-quarters of US telecommunications and cable television companies have non-investment grade corporate credit ratings, according to a report released by Standard & Poor's Ratings Services. Of the 68 issuers included in the report, 52 are rated 'BB+' or lower while 16 are regarded as investment grade. The US Telecom & Cable TV Ratings Report Card examines the key issues affecting credit quality across the industry, with individual commentary on issuers ranging from cable TV companies, diversified telecommunications companies, wireless companies, competitive local exchange carriers (CLECs) and rural local exchange carriers (RLECs).

"The challenges faced by the telecommunications and cable TV industries are daunting, particularly with the fallout from problems experienced by WorldCom and Adelphia Communications further eroding investor confidence in these sectors," said Standard & Poor's credit analyst Richard C. Siderman, managing director for telecommunications and cable. "Standard & Poor's sees the outlook for the balance of the year to be generally negative."

"However, it is important not to paint all issuers with the same brush. Many telecom companies maintain strong market positions in solid business segments despite the pessimism overhanging this industry. This is particularly true of the regional Bell operating companies, three of which are rated 'A+' or higher," Siderman added.

Overall, in addition to the low percentage of investment grade ratings, 34 of the 68 issuers have negative ratings outlooks, while only two have positive outlooks, indicating further downward pressure on telecom and cable TV ratings.