S&P:Qwest Communications Outlook Now Negative
KICK THE FRICKING PIG NACCHIO OUT THE FRICKING DOOR!
14 Dec 12:12
Following is a press release from Standard & Poor's:
NEW YORK (Standard & Poor's) Dec. 14, 2001--Standard & Poor's today revised
its outlook to negative from stable on Qwest Communications International Inc.
At the same time, Standard & Poor's affirmed its ratings on Qwest
(BBB+/Negative/A-2).
As of Sept. 30, 2001, total debt outstanding was $24.7 billion.
The outlook change reflects the company's revised forecast for 2002, caused
by lower revenues and EBITDA than Standard & Poor's had previously expected.
This revision is based on lower capacity sales (indefeasible rights of use) and
softening demand for telecom services due to the slowing economy. In addition,
obtaining approval for in-region long-distance for U S West local exchange
operations is taking longer than expected.
Projected revenues for 2002 were revised to $19.4 billion - $19.8 billion,
which are flat or slightly less compared with revenues for 2001. EBITDA was
revised to $7.1 billion - $7.3 billion, which is about 2%-5% less than 2001
level. As a result, total debt to EBITDA will be in the 3.5 times (x) area,
higher than the 3.25x target set by Standard & Poor's. To offset the flat
revenue growth, Qwest is reducing capital expenditures for 2002 and reducing
its workforce by another 7,000 positions. Capital expenditures will be in the
$4.2 billion - $4.3 billion range, which is about 50% less than the capital
expenditures incurred in 2001.
The rating on Qwest reflects the strength of its local exchange business,
offset by its less mature and price-sensitive data and IP products. The local
exchange business, which is the former U S West, contributes nearly 90% of
EBITDA and faces limited competition. Conversely, the company's data and IP
business segment is highly cyclical and faces intense competition due to the
glut of fiber capacity and the reduced spending by telecom carriers for such
services.
OUTLOOK: NEGATIVE
Standard & Poor's previously set a debt to EBITDA target of 3.25x for the
triple-'B'-plus rating level. (Standard & Poor's does not proportionally
consolidate Qwest's interest in KPN Qwest into this calculation.) With the
revised projections, this ratio will be closer to 3.5x in 2002. Maintenance of
the rating will depend upon management actions to deleverage its balance sheet
and improve cash flow measures.
(END) DOW JONES NEWS 12-14-01
12:12 PM |
