|By Business Wire||
|November 2, 2012 11:55 AM EDT||
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
Rating Telecom Companies
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
Aug. 26, 2016 07:00 AM EDT Reads: 3,903
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
Aug. 26, 2016 05:00 AM EDT Reads: 3,013
Personalization has long been the holy grail of marketing. Simply stated, communicate the most relevant offer to the right person and you will increase sales. To achieve this, you must understand the individual. Consequently, digital marketers developed many ways to gather and leverage customer information to deliver targeted experiences. In his session at @ThingsExpo, Lou Casal, Founder and Principal Consultant at Practicala, discussed how the Internet of Things (IoT) has accelerated our abil...
Aug. 26, 2016 02:15 AM EDT Reads: 1,942
With so much going on in this space you could be forgiven for thinking you were always working with yesterday’s technologies. So much change, so quickly. What do you do if you have to build a solution from the ground up that is expected to live in the field for at least 5-10 years? This is the challenge we faced when we looked to refresh our existing 10-year-old custom hardware stack to measure the fullness of trash cans and compactors.
Aug. 26, 2016 01:30 AM EDT Reads: 1,663
The emerging Internet of Everything creates tremendous new opportunities for customer engagement and business model innovation. However, enterprises must overcome a number of critical challenges to bring these new solutions to market. In his session at @ThingsExpo, Michael Martin, CTO/CIO at nfrastructure, outlined these key challenges and recommended approaches for overcoming them to achieve speed and agility in the design, development and implementation of Internet of Everything solutions wi...
Aug. 26, 2016 01:00 AM EDT Reads: 1,950
DevOps at Cloud Expo, taking place Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long dev...
Aug. 26, 2016 12:45 AM EDT Reads: 2,255
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
Aug. 26, 2016 12:30 AM EDT Reads: 2,899
I wanted to gather all of my Internet of Things (IOT) blogs into a single blog (that I could later use with my University of San Francisco (USF) Big Data “MBA” course). However as I started to pull these blogs together, I realized that my IOT discussion lacked a vision; it lacked an end point towards which an organization could drive their IOT envisioning, proof of value, app dev, data engineering and data science efforts. And I think that the IOT end point is really quite simple…
Aug. 25, 2016 11:45 PM EDT Reads: 2,285
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
Aug. 25, 2016 10:15 PM EDT Reads: 1,717
Identity is in everything and customers are looking to their providers to ensure the security of their identities, transactions and data. With the increased reliance on cloud-based services, service providers must build security and trust into their offerings, adding value to customers and improving the user experience. Making identity, security and privacy easy for customers provides a unique advantage over the competition.
Aug. 25, 2016 09:15 PM EDT Reads: 2,203
Is the ongoing quest for agility in the data center forcing you to evaluate how to be a part of infrastructure automation efforts? As organizations evolve toward bimodal IT operations, they are embracing new service delivery models and leveraging virtualization to increase infrastructure agility. Therefore, the network must evolve in parallel to become equally agile. Read this essential piece of Gartner research for recommendations on achieving greater agility.
Aug. 25, 2016 05:15 PM EDT Reads: 700
Smart Cities are here to stay, but for their promise to be delivered, the data they produce must not be put in new siloes. In his session at @ThingsExpo, Mathias Herberts, Co-founder and CTO of Cityzen Data, will deep dive into best practices that will ensure a successful smart city journey.
Aug. 25, 2016 03:30 PM EDT Reads: 1,497
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
Aug. 25, 2016 02:00 PM EDT Reads: 3,555
SYS-CON Events announced today that Venafi, the Immune System for the Internet™ and the leading provider of Next Generation Trust Protection, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Venafi is the Immune System for the Internet™ that protects the foundation of all cybersecurity – cryptographic keys and digital certificates – so they can’t be misused by bad guys in attacks...
Aug. 25, 2016 01:00 PM EDT Reads: 2,601
SYS-CON Events announced today Telecom Reseller has been named “Media Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Telecom Reseller reports on Unified Communications, UCaaS, BPaaS for enterprise and SMBs. They report extensively on both customer premises based solutions such as IP-PBX as well as cloud based and hosted platforms.
Aug. 25, 2016 09:00 AM EDT Reads: 589
For basic one-to-one voice or video calling solutions, WebRTC has proven to be a very powerful technology. Although WebRTC’s core functionality is to provide secure, real-time p2p media streaming, leveraging native platform features and server-side components brings up new communication capabilities for web and native mobile applications, allowing for advanced multi-user use cases such as video broadcasting, conferencing, and media recording.
Aug. 25, 2016 08:45 AM EDT Reads: 2,134
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
Aug. 25, 2016 08:30 AM EDT Reads: 1,797
Pulzze Systems was happy to participate in such a premier event and thankful to be receiving the winning investment and global network support from G-Startup Worldwide. It is an exciting time for Pulzze to showcase the effectiveness of innovative technologies and enable them to make the world smarter and better. The reputable contest is held to identify promising startups around the globe that are assured to change the world through their innovative products and disruptive technologies. There w...
Aug. 25, 2016 08:30 AM EDT Reads: 500
Akana has announced the availability of version 8 of its API Management solution. The Akana Platform provides an end-to-end API Management solution for designing, implementing, securing, managing, monitoring, and publishing APIs. It is available as a SaaS platform, on-premises, and as a hybrid deployment. Version 8 introduces a lot of new functionality, all aimed at offering customers the richest API Management capabilities in a way that is easier than ever for API and app developers to use.
Aug. 25, 2016 06:00 AM EDT Reads: 1,454
SYS-CON Events announced today that 910Telecom 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. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and ...
Aug. 25, 2016 02:00 AM EDT Reads: 1,819