Moody's Investor Services on Friday cut its credit rating for Sprint-Nextel Corp (S.N), citing concerns about Sprint's ability to stabilize its operating performance and earnings.
Moody's downgraded the company one notch to Ba2, which is the second highest "junk" rating, from Ba1. The outlook on the rating is negative, meaning the agency may downgrade Sprint at some point in the next 18 months.
The downgrade "reflects the company's continuing challenges in stabilizing its post-paid wireless operations, despite recognized improvements in customer service, amid intense competition and slowing industry growth," said Moody's analyst Dennis Saputo in a report.
Moody's said that AT&T Inc (T.N) and Verizon Communications Inc (VZ.N) pose the greatest threat to Sprint's efforts to thwart defections from its highly profitable post-paid subscriber business.
The negative outlook stems from Moody's concerns about Sprint's future ability "to stem the erosion of its competitive position and maintain market share."
The agency did say, though, that Sprint does have strong liquidity because of its ability to generate free cash flow and expects the company to maintain very good liquidity over the next 12 months.
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Moody's cuts Sprint-Nextel rating, citing earnings
Source: Reuters
Date: 11/20/2009
