The following wireless companies received ratings changes or guidance this week from financial services and investment firms. MetroPCS, Nortel, Motorola, Sprint, Alltel, U.S. Cellular and Telus mentioned.
- Standard & Poor’s Ratings Service withdrew its CCC/Negative/- corporate credit and senior unsecured debt ratings on MetroPCS Inc. following the company’s completion of a tender offer relating to its $150 million 10.75-percent senior notes due 2011. “While the tender included a provision for eliminating restrictive covenants and default provisions in the note indenture, the tender was not considered a distressed exchange given that the company was repurchasing the notes above par,” said Standard & Poor’s credit analyst Allyn Arden. S&P lowered its corporate credit and senior unsecured ratings on MetroPCS from CCC+ to CCC in March due to failure on the company’s part to file timely financial statements with the Securities and Exchange Commission.
- UBS Investment Research adjusted its estimates on Nortel Networks Ltd. following the company’s release of first-quarter financial results to reflect an increase in backlog, better wireless and carrier network revenue and the company’s acquisition of PEC. UBS said it now expects revenue growth of 10 percent this year for Nortel, compared with its previous estimate of 7 percent. Robert W. Baird also increased its estimates on Nortel, saying it believes 2005 will be a year of financial transition as management repositions the company. Baird maintained its neutral rating on Nortel. Standard & Poor’s affirmed its B- long-term corporate credit rating on Nortel after the company reported its first-quarter results. S&P also removed Nortel’s ratings from CreditWatch where they were placed with developing implications in April of last year. The short-term rating was raised to B-2 from B-3, and the outlook is now stable.
- Avondale Partners reiterated its market outperform rating on Plantronics Inc., based on strong 2005 growth opportunities among other financial considerations.
- Standard & Poor’s upgraded its corporate credit rating on Motorola Inc. from BBB to BBB+ with a stable outlook. “The ratings on Motorola Inc. reflect its moderate diversity; good positions in the cellular handset, two-way radio, broadband, and wireless infrastructure industries; strong balance sheet and good cash flow generating capacity, as well as the challenges of rapid technology evolution and aggressive market conditions in its core markets,” said Standard & Poor’s credit analyst Bruce Hyman.
- Merrill Lynch said it remains positive on the wireless sector at current valuation levels after mining data in its global wireless matrix. The company said it believes the wireless industry can achieve a penetration level of above 80 percent from the current level of nearly 64 percent. It also said wireline substitution and data services can offset the dilutive effect of prepaid. Finally Merrill Lynch said EBITDA margins on average in the United States should benefit from consolidation. The company maintained its buy ratings on Sprint, Alltel and U.S. Cellular.
- Robert W. Baird initiated coverage of Sandisk with an outperform rating and a price target of $38. The firm also initiated coverage of Texas Instruments with a neutral rating and a price target of $30.
- Fitch Ratings affirmed its BBB ratings on the senior unsecured debt of Telus and Telus Communications Inc. Fitch also revised its outlook on the company to positive from stable, reflecting the firm’s opinion that Telus will continue to improve its credit profile through growth in cash flow driven by its wireless operations and expectations for further debt reduction.
