Welcome!

Mobile IoT Authors: Liz McMillan, Jeev Trika, Philippe Abdoulaye, Elizabeth White, Jayaram Krishnaswamy

News Feed Item

Fitch Rates Verizon Communications' Proposed Debt Issue 'A'; Outlook Stable

Fitch Ratings has assigned an 'A' rating to Verizon Communications, Inc.'s (Verizon) (NYSE: VZ) proposed three tranche offering of $4.5 billion of senior unsecured notes. The proceeds will be used to retire prior to maturity all or a portion of $1.75 billion of debt due in 2013, $2 billion of debt due in 2018 and to fund a tender offer, contingent upon completing the offering, for any or all of the $1.25 billion 8.95% senior unsecured notes due in 2039. Remaining proceeds may be used for general corporate purposes. The Rating Outlook is Stable.

VZ's ratings are supported by strong free cash flows (FCF) which, in turn, provide the company flexibility with respect to operating within its target leverage range of 1.3 times (x)-1.4x. This leverage range is conservative relative to Fitch's expectations of around 1.5x for the category. Additional supporting factors include the significant scale and scope of the company's domestic wireline and wireless businesses and the high proportion of revenues from wireless and wireline growth areas. An important component of VZ's ratings is the expectation for continued relatively strong growth in Verizon Wireless' (VZW) revenue, EBITDA, and FCF. In the first nine months of 2012, the domestic wireless segment produced approximately 65% of total consolidated revenues.

Gross leverage for the last 12 months (LTM) ending Sept. 30, 2012 was 1.4x. Consolidated cash balances declined from $13.4 billion at the end of 2011 to $9.7 billion at Sept. 30, 2012 as VZW paid a $10 billion dividend in January, of which $4.5 billion was to VZW's 45% owner, Vodafone Group Plc. The support for the distribution is provided by VZW's strong FCF generation. Over the LTM ending Sept. 30, 2012, VZW's simple FCF (EBITDA less capital spending) was approximately $21.5 billion.

The ratings also incorporate Verizon's recently disclosed plans to contribute $3.4 billion to its pension plans in 2012, $2.1 billion higher than the company estimated at the beginning of 2012. The new 2012 contribution amount funds the transfer of the company's management pension plan to Prudential Insurance Company of America as well as maintains the existing funding percentage with the pension plans that remain the obligation of Verizon. Through the first nine months of 2012, Verizon contributed $1.8 billion to its pension plans and expects to contribute $1.6 billion to the plans during the fourth quarter of 2012.

Concerns include the ongoing competitive pressures in the residential wireline market from wireless substitution and cable telephony competition, and the effect of the slow economic recovery on revenues from business and residential customers.

There is event risk regarding VZ's potential acquisition of Vodafone 45% interest in VZW, as there would be concerns with regard to its initial outlay and financing. At the current time, the companies are strongly committed to the partnership, particularly given the distribution in early 2012 and expected strong cash flows that would support potential future distributions.

At Sept. 30, 2012, VZ had $52.8 billion in debt on a consolidated basis. Of this amount, $6.3 billion matures within one year, or $4.3 billion pro forma for the make-whole call. VZ's commercial paper (CP) issuances approximated $2.3 billion and are backed by a $6.2 billion credit facility, and Fitch expects the company to maintain aggregate CP balances within a level fully backed by the facility. The credit facility has no ratings triggers or other restrictive covenants, such as leverage or interest coverage tests. The three-year facility matures in August 2016. After the effect of letters of credit (LOCs), approximately $6.1 billion is available on the facility. On a consolidated basis, VZ and its subsidiaries have scheduled debt maturities of approximately $100 million and $5.4 billion in 2012 and 2013, respectively.

In the LTM ending Sept. 30, 2012, FCF after dividends and capital spending (but prior to the VZW distribution to Vodafone) was approximately $12.7 billion. In 2012, Fitch expects VZ's FCF (after capital spending, pension contributions and dividends but prior to distributions to Vodafone and the acquisition of wireless spectrum) to be in a $10.5 billion to $11.5 billion range, an increase from the $8 billion generated in 2011. Fitch believes that as FCF continues to grow, and in the absence of other investment alternatives, the company will have the flexibility to consider stock repurchases within the context of maintaining leverage within its 1.3x-1.4x target range.

In 2012, Fitch expects consolidated capital spending to be down slightly relative to 2011 levels, when spending totaled approximately $16.2 billion. VZ has not provided capital spending guidance by business segment for 2012. In 2012, key areas of capital spending will consist of the continued buildout of advanced networks, including the 4G wireless network and FiOS, well as core network spending on IP and data center enhancements.

What Could Trigger A Rating Action

A positive rating action could occur if:

--Fitch believes a positive rating action is unlikely, given the industry's business and technological risks.

A negative rating action could occur if:

--The rating could be negatively affected by heightened wireless competition. Fitch believes there is a relatively low probability that VZW's competitive position will become weaker than the wireless industry as a whole.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 8, 2012);

--'Rating Telecom Companies - Sector Credit Factors' (Aug. 9, 2012).

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

Rating Telecom Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682323

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
In his general session at 18th Cloud Expo, Lee Atchison, Principal Cloud Architect and Advocate at New Relic, discussed cloud as a ‘better data center’ and how it adds new capacity (faster) and improves application availability (redundancy). The cloud is a ‘Dynamic Tool for Dynamic Apps’ and resource allocation is an integral part of your application architecture, so use only the resources you need and allocate /de-allocate resources on the fly.
Information technology is an industry that has always experienced change, and the dramatic change sweeping across the industry today could not be truthfully described as the first time we've seen such widespread change impacting customer investments. However, the rate of the change, and the potential outcomes from today's digital transformation has the distinct potential to separate the industry into two camps: Organizations that see the change coming, embrace it, and successful leverage it; and...
SYS-CON Events announced today that Roundee / LinearHub will exhibit at the WebRTC Summit at @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. LinearHub provides Roundee Service, a smart platform for enterprise video conferencing with enhanced features such as automatic recording and transcription service. Slack users can integrate Roundee to their team via Slack’s App Directory, and '/roundee' command lets your video conference ...
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, wh...
Digital transformation is too big and important for our future success to not understand the rules that apply to it. The first three rules for winning in this age of hyper-digital transformation are: Advantages in speed, analytics and operational tempos must be captured by implementing an optimized information logistics system (OILS) Real-time operational tempos (IT, people and business processes) must be achieved Businesses that can "analyze data and act and with speed" will dominate those t...
The Jevons Paradox suggests that when technological advances increase efficiency of a resource, it results in an overall increase in consumption. Writing on the increased use of coal as a result of technological improvements, 19th-century economist William Stanley Jevons found that these improvements led to the development of new ways to utilize coal. In his session at 19th Cloud Expo, Mark Thiele, Chief Strategy Officer for Apcera, will compare the Jevons Paradox to modern-day enterprise IT, e...
There are several IoTs: the Industrial Internet, Consumer Wearables, Wearables and Healthcare, Supply Chains, and the movement toward Smart Grids, Cities, Regions, and Nations. There are competing communications standards every step of the way, a bewildering array of sensors and devices, and an entire world of competing data analytics platforms. To some this appears to be chaos. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, Bradley Holt, Developer Advocate a...
SYS-CON Events announced today that Bsquare has been named “Silver Sponsor” of SYS-CON's @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. For more than two decades, Bsquare has helped its customers extract business value from a broad array of physical assets by making them intelligent, connecting them, and using the data they generate to optimize business processes.
There is growing need for data-driven applications and the need for digital platforms to build these apps. In his session at 19th Cloud Expo, Muddu Sudhakar, VP and GM of Security & IoT at Splunk, will cover different PaaS solutions and Big Data platforms that are available to build applications. In addition, AI and machine learning are creating new requirements that developers need in the building of next-gen apps. The next-generation digital platforms have some of the past platform needs a...
SYS-CON Events announced today that ReadyTalk, a leading provider of online conferencing and webinar services, has been named Vendor Presentation Sponsor at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. ReadyTalk delivers audio and web conferencing services that inspire collaboration and enable the Future of Work for today’s increasingly digital and mobile workforce. By combining intuitive, innovative tec...
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
Fact is, enterprises have significant legacy voice infrastructure that’s costly to replace with pure IP solutions. How can we bring this analog infrastructure into our shiny new cloud applications? There are proven methods to bind both legacy voice applications and traditional PSTN audio into cloud-based applications and services at a carrier scale. Some of the most successful implementations leverage WebRTC, WebSockets, SIP and other open source technologies. In his session at @ThingsExpo, Da...
The Internet of Things can drive efficiency for airlines and airports. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Sudip Majumder, senior director of development at Oracle, will discuss the technical details of the connected airline baggage and related social media solutions. These IoT applications will enhance travelers' journey experience and drive efficiency for the airlines and the airports. The session will include a working demo and a technical d...
Almost two-thirds of companies either have or soon will have IoT as the backbone of their business in 2016. However, IoT is far more complex than most firms expected. How can you not get trapped in the pitfalls? In his session at @ThingsExpo, Tony Shan, a renowned visionary and thought leader, will introduce a holistic method of IoTification, which is the process of IoTifying the existing technology and business models to adopt and leverage IoT. He will drill down to the components in this fra...
I'm a lonely sensor. I spend all day telling the world how I'm feeling, but none of the other sensors seem to care. I want to be connected. I want to build relationships with other sensors to be more useful for my human. I want my human to understand that when my friends next door are too hot for a while, I'll soon be flaming. And when all my friends go outside without me, I may be left behind. Don't just log my data; use the relationship graph. In his session at @ThingsExpo, Ryan Boyd, Engi...
SYS-CON Events announced today that Pulzze Systems will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Pulzze Systems, Inc. provides infrastructure products for the Internet of Things to enable any connected device and system to carry out matched operations without programming. For more information, visit http://www.pulzzesystems.com.
SYS-CON Events announced today that Numerex Corp, a leading provider of managed enterprise solutions enabling the Internet of Things (IoT), will exhibit at the 19th International Cloud Expo | @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Numerex Corp. (NASDAQ:NMRX) is a leading provider of managed enterprise solutions enabling the Internet of Things (IoT). The Company's solutions produce new revenue streams or create operating...
If you’re responsible for an application that depends on the data or functionality of various IoT endpoints – either sensors or devices – your brand reputation depends on the security, reliability, and compliance of its many integrated parts. If your application fails to deliver the expected business results, your customers and partners won't care if that failure stems from the code you developed or from a component that you integrated. What can you do to ensure that the endpoints work as expect...
The Transparent Cloud-computing Consortium (abbreviation: T-Cloud Consortium) will conduct research activities into changes in the computing model as a result of collaboration between "device" and "cloud" and the creation of new value and markets through organic data processing High speed and high quality networks, and dramatic improvements in computer processing capabilities, have greatly changed the nature of applications and made the storing and processing of data on the network commonplace.
WebRTC adoption has generated a wave of creative uses of communications and collaboration through websites, sales apps, customer care and business applications. As WebRTC has become more mainstream it has evolved to use cases beyond the original peer-to-peer case, which has led to a repeating requirement for interoperability with existing infrastructures. In his session at @ThingsExpo, Graham Holt, Executive Vice President of Daitan Group, will cover implementation examples that have enabled ea...