NEW YORK-Moody’s Investors Service Inc. announced Jan. 22 it had downgraded to B3 from B2 its speculative grade rating on $450 million in outstanding Omnipoint Corp. 10-year notes.
Moody’s estimated that Omnipoint has only two years to generate the more than $100 million in annual operating cash flow that will be necessary to repay interest on outstanding debt, including Federal Communications Commission personal communications services licenses the wireless carrier acquired at auctions concluded Jan. 14. The New York-based debt rating agency said it might review its downgrade if Omnipoint raises substantial amounts of additional equity or gains at least one strategic partner.
“As the company’s recent difficulties in turning on service in the New York City market demonstrate, attention to core businesses is important for relatively new businesses,” said the announcement, written by James Parrish, managing director, and Eric Goldstein, senior analyst, both in the Speculative Grade Ratings group.
The rating agency said it is concerned in part about additional capital requirements and other uncertainties relating to Omnipoint’s financing for the buildout of its newly acquired FCC licenses in the recent D-, E-and F-block auctions.
