TEXT - S&P rates Telephone & Data Systems notes 'BBB-'
Nov 26 - Standard & Poor's Ratings Services today assigned its 'BBB-' issue-level rating to Telephone and Data Systems Inc.'s (TDS) proposed $200 million maximum senior unsecured notes due 2061. The existing ratings on TDS, including the 'BBB-' corporate credit rating and negative rating outlook, remain unchanged. As of Sept. 30, 2012, debt to EBITDA (adjusted for operating leases and post retirement obligations) was 2.1x, which we expect to remain in the low-2x area pro forma for the proposed debt issuance. Although leverage is slightly higher than the typical 1.5x to 2x range that we normally associate with the company's "modest" financial risk profile, this is somewhat offset by the company's "strong" liquidity in our assessment. Due to significant secular and competitive pressures on the wireline and wireless businesses, we do not expect leverage to improve organically over the next 12 months. Opportunities for permanent debt reduction include the repayment of the company's 6.625% senior notes due 2045 ($116.3 million outstanding as of Sept. 30, 2012), which became callable at par in 2010. The negative rating outlook, which indicates a one-third possibility of a downgrade over the next two years, continues to focus on business fundamentals. The rating could be pressured if competition at U.S. Cellular intensifies, leading to higher subscriber losses and depressed EBITDA margins. For the corporate credit rating rationale on Telephone and Data Systems, see the summary analysis published on Sept. 21, 2012, on RatingsDirect. RELATED CRITERIA AND RESEARCH -- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012 -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011 -- Use Of CreditWatch And Outlooks, Sept. 14, 2009 -- Criteria Guidelines For Recovery Ratings, Aug. 10, 2009 -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 -- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008 -- 2008 Corporate Criteria: Ratios And Adjustments, April 15, 2008 RATINGS LIST Telephone and Data Systems Inc. Corporate Credit Rating BBB-/Negative/-- New Rating Telephone and Data Systems Inc. Senior Unsecured Notes Due 2061 BBB-
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