NEW YORK-Standard & Poor’s Ratings Service Inc. has placed all entities related to Verizon Communications Inc., including Verizon Wireless, on CreditWatch with negative implications.
The move follows S&P’s decision last month to place SBC Communications Inc. and BellSouth Corp., including their Cingular Wireless L.L.C. affiliate, on CreditWatch with negative implications, which came after Cingular announced it would acquire AT&T Wireless Services. Inc.
According to S&P, debt for the five companies totals $80 billion.
The ratings service said that although the companies have solid business positions, strong balance sheets, and significant plays in the wireless market, their wireline sectors have been compromised by the continued loss of access lines to wholesale lessors, wireless substitution and cable telephony.
“Despite the regional Bell operating companies’ still formidable strengths and some potential prospects for growth, given the significant business challenges, along with the lack of clarity surrounding some key competitive issues, it will be difficult for these companies to maintain a high ‘A’ rating,” S&P said in a statement.
Verizon responded to the action, calling it unwarranted and pointing to its strong business results, including $6.4 billion in free cash flow last year and a debt reduction of $18 billion in the past two years.
“During this time, our wireless business has stood head-and-shoulders above the rest of the industry, and we are continuing to widen our lead in this profitable growth market as others are scrambling to try to keep up,” Doreen Toben, Verizon’s chief financial officer, further responded.
Shares of Verizon were trading slightly down at $36.06 following the news.