Dec 2 (The following statement was released by the rating agency)
Fitch Ratings released its 2014 outlook for the
U.S. Telecommunications sector today. The sector's outlook is stable based on
long-term, robust data service demand and general stability in credit protection
measures. However, some concerns remain about the commitment and capability of
certain companies to recover from past leveraging activities.
Data service demand transcends all subsectors of the industry and should be
pushed by a growing penetration of smartphones/connected devices, expanding
internet accessible video entertainment, high bandwidth wireline interconnection
requirements, data hosting, cloud and other data sensitive services. Accelerated
and aggressive infrastructure investment also has positioned the sector
favorably to respond and garner greater cost controls from a growing Internet
protocol (IP) operating environment.
In general, debt-to-EBITDA leverage and EBITDA-to-interest coverage levels
should be stable in 2014 for the industry. While EBITDA is expected to grow in
aggregate by mid-single digits, higher debt is offsetting any leverage
improvements. Liquidity remains strong with a favorable near-term maturity
schedule. Fitch does have a developing concern related to an extremely friendly
debt placement market, which may be weakening the incentive for companies to
maintain higher credit ratings.
The full report, '2014 Outlook: Telecom and Cable - Data Growth a Key Positive,
but Concerns Exist', is available at 'www.fitchratings.com'.