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To: Eric L who wrote (21030)	7/5/2002 4:14:36 PM
From: Eric L	Read Replies (1) \| Respond to of 34857

re: AWS Debt Rating >> AT&T Wireless Debt Rating Expected To Improve Cellular News July 5th, 2002 Fitch Ratings has reaffirmed AT&T Wireless's (AWE) Senior Unsecured Debt and Short-term Debt at 'BBB' and 'F2'. Additionally, the senior subordinated notes issued by TeleCorp Wireless and Tritel PCS, which were acquired by AWE in February 2002, has been upgraded to 'BBB' from 'BBB-' following AWE's decision to guarantee the debt. The Rating Outlook for AWE is Stable. While the wireless industry remains challenged with a fair degree of uncertainty regarding the potential outcome of several issues, AWE's financial profile remains solid for a 'BBB' rated credit. With US$1.6 billion in cash at the end of the first quarter and combined with its recent US$3 billion debt issuance, Fitch expects AWE to have approximately US$4 billion in cash available at the end of the second quarter. This cash combined with its US$1.2 billion accounts receivable securitization program and US$2.5 billion of credit facilities backing its CP program provide AWE with enough liquidity, Fitch believes, to reach FCF positive, which is anticipated by the end of 2003. Debt was approximately US$8.2 billion at the end of the first quarter. Factoring in the repayment of approximately 35% of the Tritel/TeleCorp debt and the US$3 billion offering, total debt should be in the range of US$10.6 - US$10.8 billion. Based on management's financial guidance, total debt-to-EBITDA should be in the range of 2.8-3.0 times (x) at the end of 2002 excluding any funding considerations for NextWave, which are highly unlikely at this point in time. Fitch says that capital spending, which remains a concern, will be about US$5.3 billion for the year as AWE materially completes its GSM/GPRS build-out in 2002. Given the current economic softness and competitive effects felt within the wireless industry, Fitch expects AWE to prudently manage capital expenditures in 2003 as spending will remain elevated, although lower than 2002's peak level, for further capacity requirements in the GSM network. Key challenges in 2002 include pricing pressures affecting ARPU, the ability to add quality subscribers as penetration rates increase, further cost reductions across its business, the number of competitors in each market and the accelerated EBITDA growth in the second half of 2002 to meet financial targets. The ability for AWE to meet guidance is dependent on an improving economy in the second half, further cost improvements, positively trending churn and the impact of its revenue enhancement plans mitigating negative ARPU trends. Additional challenges will remain in meeting guidance for growth of 20% in total subscribers on a consolidated basis during 2002. Given lower commissions and promotions, net additions for the second quarter were expected to be 550,000, approximately 100,000 lower than the first quarter. << - Eric -