World VoIP NewsFitch ratings confirms Verizon Communications with stable outlookFitch ratings confirms Verizon Communications with stable outlook

Fitch ratings confirms Verizon Communications with stable outlook

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Fitch Ratings has maintained its stable outlook for Verizon Communications debts, although it is also maintaining its Rating Watch Negative on the subsidiaries that the company is currently in the process of selling to Frontier Communications.
­Fitch said that Verizon's ratings reflect the significant scale and scope of its domestic wireline and wireless businesses, the high proportion of revenues from wireless and wireline growth areas, and, following the acquisition of Alltel Corp. in January 2009, the return by the end of 2010 to a leverage range supportive of the 'A' rating, which in Fitch's view is 1.5 times (x) to 1.6x.

Fitch noted that there is event risk regarding Verizon's potential acquisition of Vodafone's  45% interest in Verizon Wireless, as there would be concerns with regard to its initial outlay and financing. At the current time, the companies appear strongly committed to the partnership.

An important component of Verizon's and Verizon Wireless-related ratings are expectations for continued relatively strong growth at Verizon Wireless of revenue, EBITDA, and free cash flow. In 2009, the domestic wireless segment produced 57% and 69% of total segment revenues and EBITDA, respectively. Over the next several years, Fitch expects Verizon Wireless's contribution to consolidated revenue and EBITDA to continue to increase through continued growth, particularly from wireless data services. In Fitch's view, potential integration risk related to the Alltel acquisition in January 2009 has diminished materially given the strong performance of the wireless segment since the merger.

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