Moody’s Investor Services affirmed its long-term debt rating and raised its outlook from stable to positive for Sprint Corp., citing higher free cash flow driven by its wireless business and the belief that wireless growth will offset modest overall declines in the company’s wireline operations.
Moody’s noted that since it assigned a stable outlook to Sprint in June 2003, the company has generated “significant” cash flow, reduced debt and improved credit metrics ahead of expectations. Moody’s added that Sprint also has taken steps to resolve disputes with most of its wireless affiliates and to strengthen corporate governance, which were two issues Moody’s highlighted last year.
Moody’s said it may take further positive rating action if Sprint continues to profitably grow its wireless subscriber base, expands its wireless wholesale operations using excess network capacity without requiring significant capacity upgrades, and maximizes wireline free cash flow by controlling operating expenses and capital spending without under-investing.
