NEW YORK-Duff & Phelps Credit Rating Co. said June 25 it had raised the ratings on debt securities issued by U.S. Cellular Corp. while affirming the ratings on outstanding debt of its parent, Telephone and Data Systems Inc., Chicago. TDS and its subsidiaries have about $1.3 billion in debt outstanding.
The Chicago-based rating agency raised to BBB+ from BBB- the ratings on U.S. Cellular’s outstanding subordinated liquid yield option notes. BBB- is the lowest investment grade rating given by Duff & Phelps. The agency also increased to A- from BBB+ the rating on U.S. Cellular’s senior long-term debt.
“U.S. Cellular has posted sequential improvements in subscriber penetration gains, which have followed heavy investments made to improve wide-area and portable coverage in the last few years,” said the announcement by Duff & Phelps’ analysts Michael P. Coutre and Michael L. Weaver. “We anticipate strong internal growth to continue over the next several quarters even as new competitors begin to penetrate certain U.S. Cellular markets.”
Additionally, Duff & Phelps affirmed its BBB rating on the medium-term notes of parent company TDS, saying in part this was due to U.S. Cellular’s improvement. Besides cellular, TDS owns and operates telephone, personal communications services and paging businesses throughout the country.
“TDS’ PCS investment requirements will peak in 1997 as commercial start-up costs are added to ongoing heavy and accelerated system buildout expenditures,” Coutre and Weaver said. “The company continues to evaluate alternatives to obtain equity funding in support of its PCS investments, including private and public equity sources, which would provide for additional financial cushion and flexibility at its current rating level.”
