S&P downgrades Alltel to A- from A
The following is a summary of a UBS full-length report on this topic, dated January 20, 2006.
S&P downgrades Alltel to A- from A: Standard & Poor's downgraded the credit rating of Alltel to A- from A and assigned a stable outlook. The ratings were previously placed on CreditWatch Negative in December 2005 with the announced plan to spin off and merge its wireline business with that of Valor.
Increased business risk in the wireless sector: The rating downgrade reflects heightened business risk for AT as a regional wireless carrier facing competition from larger national wireless providers in an environment of slowing subscriber growth. S&P expects price competition to pressure AT's overrall ARPU and EBITDA margins, limiting growth prospects for these metrics.
We maintain Underperform: In light of relatively tight spreads and risks related to competition from larger carriers, price competition, share buybacks, and possible acquisitions, we maintain an Underperform on AT. We reiterate our "A" rating and "Deteriorating" Credit Trend.
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