 |
| T-Mobile |
Moody's said its review could last into 2012, when the deal is expected to close, because of the possible effects of decisions by the Justice Department. Regulatory scrutiny is expected because together, AT&T and T-Mobile would be the largest wireless company in the U.S. with 43 percent of the country's subscribers, outpacing the current leader, Verizon Wireless.
The ratings agency said it expects AT&T to raise about $20 billion in new debt to fund the acquisition. Taking on more debt would push the company's balance of debt to earnings outside Moody's guidelines for the "A2" investment-grade rating it currently has on AT&T.
"Given the nature of upfront spending on integration and investments required to turn around T-Mobile's operations, AT&T's credit metrics will not likely revert to historic levels until 2013 or 2014," said Moody's Vice President Gerald Granovsky in a statement. Part of Moody's review will be to assess the ability of management to get the debt-to-earnings ratio back in line.
Moody's also said it expects AT&T will not get critical data related to T-Mobile customers until one or two quarters after the acquisition closes.
Moody's said Monday it has placed ratings for AT&T's subsidiaries under review for downgrade, including AT&T Mobility, which may be forced to dispose of certain assets that could weaken its credit profile.
The ratings on review for possible downgrade are those for: AT&T Inc., AT&T Corp., AT&T Mobility LLC, BellSouth Capital Funding Corp., BellSouth Corp., BellSouth Telecommunications Inc., New Cingular Wireless Services Inc., Pacific Bell, SBC Communications Capital Corp., South Central Bell Telephone Co. and Southern Bell Telephone & Telegraph Co. Moody's currently gives them all "A2" ratings.
Sources: http://www.businessweek.com
