CHICAGO-Despite the possibility the carrier may be forced to chip in additional funds to cover spectrum procured through its Consensus spectrum realignment plan currently in front of the Federal Communications Commission, Fitch Ratings upgraded its rating of Nextel Communications Inc.’s senior unsecured notes and preferred stock and maintained its Stable outlook rating for the carrier.
The ratings agency cited Nextel’s continued progress in improving its credit profile through its strong operating performance that was driving greater cash flows, and ongoing balance sheet reconstruction to reduce financial risk. In addition, Fitch noted Nextel’s operational trends remain positive despite competitive threats from local number portability and push-to-talk offerings.
Fitch also said that uncertainty remains surrounding the FCC’s review of Nextel’s spectrum realignment plan, “Nextel has significant flexibility within its current ratings to offset event risk associated with the Consensus plan proposal even if the FCC requires Nextel to increase its funding commitment in exchange for PCS spectrum.”
Nextel originally committed $850 million to the proposal that would see the carrier give up its spectrum holdings in the 700 MHz and 900 MHz bands and realign its 800 MHz spectrum holdings in exchange for 10 megahertz of spectrum in the 1.9 GHz bands. A number of Nextel’s competitors as well as the Cellular Telecommunications & Internet Association have filed motions protesting the plan, claiming Nextel would be presented with billions of dollars of wireless spectrum in the 1.9 GHz bands in exchange for fixing interference issues it created in the 800 MHz bands being used by public-safety agencies.
