NEW YORK-AirTouch Communications Inc., San Francisco, plans the public sale of about $721 million in notes denominated in German marks in order to retire bank debt and commercial paper.
Moody’s Investors Service and Standard & Poor’s Corp., both in New York, accorded the proposed issue investment-grade ratings of Baa2 and BBB+, respectively.
“AirTouch has absorbed an additional $1.35 billion of debt from [its] U S West [Inc.] acquisition, and [it] can debt finance additional international diversification and its announced stock buy-back at the current rating level,” said Timothy E. Caffrey and Catherine Cosentino, telecommunications analysts for Standard & Poor’s.
AirTouch has domestic cellular and personal communications licenses covering 94 million people, up from 59 million prior to the U S West acquisition. Its American wireless telephony subscribers number 6.9 million and paging subscribers 3.1 million.
The carrier’s U.S. cellular operations, which provide 60 percent of its operating cash flow, “will remain strong, at least over the next few years,” Moody’s said. The rating agency noted AirTouch’s operating cash flow margins of about 45 percent are “among the best in the industry.”
“The company’s international ventures-the largest of which are in Germany, Portugal, Sweden and Italy-benefit from the strong global demand for wireless telephony services … (and) now account for seven of every 10 new customers, a trend Moody’s expects will continue,” said Dennis Saputo and Robert Konefal, telecommunications analysts for Moody’s.
“[AirTouch continues] to pursue wireless licenses in countries that are in relatively early stages of telecommunications infrastructure development. [While offering] the potential of significant returns, their risk profile is typically high due to the amount of capital required to build the networks and the developing regulatory frameworks.”
