|By Business Wire||
|November 28, 2012 05:24 PM EST||
Fitch Ratings has assigned an 'A' rating to AT&T Inc.'s (AT&T) offering of EUR1 billion 1.875% senior unsecured notes due 2020. Proceeds are expected to be used for general corporate purposes. The Rating Outlook is Negative.
The current 'A' rating is supported by AT&T's financial flexibility, the company's diversified revenue mix, its significant size and economies of scale as the largest telecommunications operator in the U.S., and Fitch's expectation that AT&T will benefit from continued growth in wireless operating cash flows.
The Negative Outlook reflects Fitch's expectation that AT&T's net leverage is likely to move up to its recently disclosed 1.8x upper boundary for leverage, which represents a notable increase from the 1.47x at the end of the third quarter of 2012 on a last 12-month (LTM) basis. The increased leverage is expected to arise from the combined effects of a moderate increase in wireless and wireline capital spending and the continuation of the company's share repurchase program as announced in early November 2012. Prospective leverage expectations are subject to uncertainty caused by the rate of stock repurchases, actual capital expenditure levels, possible acquisitions (such as longer-term spectrum needs) and asset divestitures (of which there are none in Fitch's expectations).
Fitch believes increased capital spending will strengthen the company's competitive position and is a positive rating factor. Over the next three years, Fitch believes capital spending will increase about 10%-12% over prior baseline levels to $22 billion annually and then revert to mid-teen historical levels. The investment program will expand the population covered by AT&T's 4G LTE network by approximately 20% to 300 million, and enable the company to provide higher broadband speeds over its wireline network in more rural areas. By comparison, the company's original capital spending guidance for 2012 was about $20 billion, although the company reduced guidance to the low end of a $19 billion to $20 billion range in October 2012.
Over the 2013-2015 period, AT&T will spend approximately $8 billion to increase its 4G LTE network coverage from 250 million to 300 million pops (persons of population). This coverage is expected to be completed by the end of 2014. In addition to increasing 4G LTE coverage, AT&T will be increasing capacity through the addition of 10,000 new macro cell sites, 1,000 distributed antenna systems and 40,000 small cells. Up to nearly 30MHz of new spectrum in the wireless communications spectrum (WCS) band will be deployed nationwide, with service to be commercial in 2015. Approximately $6 billion will be spent to upgrade the broadband speeds available to 75% of the customer locations in the company's wireline footprint. In the remaining 25% of the customer locations where it will not be economical to upgrade the wireline network to faster broadband speeds, the company will offer a 4G LTE solution. These customer locations are scattered across 65% of the company's geography.
In early 2012, AT&T started repurchasing common stock under a December 2010 authorization (the company did not repurchase stock while the T-Mobile USA transaction was under consideration in 2011). Through the first nine months of 2012, AT&T's strong free cash flow (FCF) and operating results have enabled the company to maintain its net leverage metric at around 1.5x even while repurchasing nearly $9 billion of common stock. Fitch expects FCF to decline from the $8 billion to $9 billion expected in 2012 to $4 billion annually, on average, over the next three years.
For 2012, Fitch expects AT&T's leverage to be flat with 2011, when gross leverage was 1.56x as adjusted for non-recurring items and the actuarial losses on its benefit plans. After 2012, AT&T's continuation of stock repurchases requiring some borrowing as repurchases will be above FCF levels, will push leverage up over time, with net leverage expected to peak near a 1.8x upper boundary in 2014. Thereafter, leverage is expected to decline over time.
In Fitch's view, liquidity is strong and provided by the company's FCF; additional financial flexibility is provided by availability on the company's revolving credit facilities. At Sept. 30, 2012, total debt outstanding was approximately $63.7 billion, a moderate decline from the $64.8 billion outstanding at the end of 2011. Of the total, $3.4 billion consists of debt due within one year, including debt that can be put to the company. At Sept. 30, 2012, cash amounted to $2.2 billion, and for the LTM ending Sept. 30, 2012, AT&T produced $7 billion in FCF (net cash provided by operating activities less capital expenditures and dividends).
At end of the third quarter of 2012, the company did not have any drawings on its $5 billion revolving credit facility due 2015, nor on its $3 billion, 364-day facility due December 2012. The principal financial covenant for the 2015 facility requires debt to EBITDA, as defined in the agreement, to be no more than 3x. The identical financial covenant is only applicable in the 364-day facility if advances are converted into a term loan.
Relative to the company's expected free cash flows, upcoming debt maturities are manageable. There are no material debt maturities remaining in 2012. In 2013, debt maturities approximate $3.4 billion, including approximately $1.6 billion in debt that may be put to the company. Maturities amount to $3.8 billion in 2014.
What Could Trigger A Rating Action
The Rating Outlook could be revised to Stable if:
--The company begins to manage net leverage down from Fitch's expected peak just under 1.8x in 2014;
--Fitch believes leverage will not reach peak levels as a result of the outcome of the following factors, including, but not limited to, stronger operating results, lower capital spending, and the effect of any acquisitions or divestitures that may occur.
A negative rating action could occur if:
--Net leverage remains above (or is expected to remain above) the 1.8x level for several quarters, including expected leverage resulting from a material transaction;
--Fitch believes management has weakened its commitment to returning to, or operating longer-term with, leverage at a level more reflective of the rating.
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
SYS-CON Events announced today TechTarget has been named “Media Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. TechTarget is the Web’s leading destination for serious technology buyers researching and making enterprise technology decisions. Its extensive global networ...
May. 29, 2016 05:15 AM EDT Reads: 3,261
The IoTs will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm and share the must-have mindsets for removing complexity from the development proc...
May. 29, 2016 05:00 AM EDT Reads: 1,963
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management...
May. 29, 2016 04:30 AM EDT Reads: 3,233
SYS-CON Events announced today that MangoApps will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. MangoApps provides modern company intranets and team collaboration software, allowing workers to stay connected and productive from anywhere in the world and from any device. For more information, please visit https://www.mangoapps.com/.
May. 29, 2016 03:30 AM EDT Reads: 965
The essence of data analysis involves setting up data pipelines that consist of several operations that are chained together – starting from data collection, data quality checks, data integration, data analysis and data visualization (including the setting up of interaction paths in that visualization). In our opinion, the challenges stem from the technology diversity at each stage of the data pipeline as well as the lack of process around the analysis.
May. 29, 2016 02:45 AM EDT Reads: 1,485
Designing IoT applications is complex, but deploying them in a scalable fashion is even more complex. A scalable, API first IaaS cloud is a good start, but in order to understand the various components specific to deploying IoT applications, one needs to understand the architecture of these applications and figure out how to scale these components independently. In his session at @ThingsExpo, Nara Rajagopalan is CEO of Accelerite, will discuss the fundamental architecture of IoT applications, ...
May. 29, 2016 02:00 AM EDT Reads: 1,323
SYS-CON Events announced today that Tintri Inc., a leading producer of VM-aware storage (VAS) for virtualization and cloud environments, will exhibit at the 18th International CloudExpo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, New York, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
May. 29, 2016 01:30 AM EDT Reads: 2,474
In his session at 18th Cloud Expo, Bruce Swann, Senior Product Marketing Manager at Adobe, will discuss how the Adobe Marketing Cloud can help marketers embrace opportunities for personalized, relevant and real-time customer engagement across offline (direct mail, point of sale, call center) and digital (email, website, SMS, mobile apps, social networks, connected objects). Bruce Swann has more than 15 years of experience working with digital marketing disciplines like web analytics, social med...
May. 29, 2016 01:00 AM EDT Reads: 1,405
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...
May. 29, 2016 12:45 AM EDT Reads: 2,052
SYS-CON Events announced today that EastBanc Technologies will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. EastBanc Technologies has been working at the frontier of technology since 1999. Today, the firm provides full-lifecycle software development delivering flexible technology solutions that seamlessly integrate with existing systems – whether on premise or cloud. EastBanc Technologies partners with p...
May. 28, 2016 11:00 PM EDT Reads: 2,376
SYS-CON Events announced today BZ Media LLC 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. BZ Media LLC is a high-tech media company that produces technical conferences and expositions, and publishes a magazine, newsletters and websites in the software development, SharePoint, mobile development and Commercial Drone markets.
May. 28, 2016 07:00 PM EDT Reads: 3,640
SYS-CON Events announced today that ContentMX, the marketing technology and services company with a singular mission to increase engagement and drive more conversations for enterprise, channel and SMB technology marketers, has been named “Sponsor & Exhibitor Lounge Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York City, New York. “CloudExpo is a great opportunity to start a conversation with new prospects, but what happens after the...
May. 28, 2016 07:00 PM EDT Reads: 1,265
SYS-CON Events announced today that Alert Logic, Inc., the leading provider of Security-as-a-Service solutions for the cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Alert Logic, Inc., provides Security-as-a-Service for on-premises, cloud, and hybrid infrastructures, delivering deep security insight and continuous protection for customers at a lower cost than traditional security solutions. Ful...
May. 28, 2016 06:45 PM EDT Reads: 2,913
WebRTC is bringing significant change to the communications landscape that will bridge the worlds of web and telephony, making the Internet the new standard for communications. Cloud9 took the road less traveled and used WebRTC to create a downloadable enterprise-grade communications platform that is changing the communication dynamic in the financial sector. In his session at @ThingsExpo, Leo Papadopoulos, CTO of Cloud9, will discuss the importance of WebRTC and how it enables companies to fo...
May. 28, 2016 03:45 PM EDT Reads: 2,548
The IoT is changing the way enterprises conduct business. In his session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, discuss how businesses can gain an edge over competitors by empowering consumers to take control through IoT. We'll cite examples such as a Washington, D.C.-based sports club that leveraged IoT and the cloud to develop a comprehensive booking system. He'll also highlight how IoT can revitalize and restore outdated business models, making them profitable...
May. 28, 2016 02:00 PM EDT Reads: 2,937
IoT generates lots of temporal data. But how do you unlock its value? How do you coordinate the diverse moving parts that must come together when developing your IoT product? What are the key challenges addressed by Data as a Service? How does cloud computing underlie and connect the notions of Digital and DevOps What is the impact of the API economy? What is the business imperative for Cognitive Computing? Get all these questions and hundreds more like them answered at the 18th Cloud Expo...
May. 28, 2016 01:00 PM EDT Reads: 2,364
SYS-CON Events announced today the How to Create Angular 2 Clients for the Cloud Workshop, being held June 7, 2016, in conjunction with 18th Cloud Expo | @ThingsExpo, at the Javits Center in New York, NY. Angular 2 is a complete re-write of the popular framework AngularJS. Programming in Angular 2 is greatly simplified. Now it’s a component-based well-performing framework. The immersive one-day workshop led by Yakov Fain, a Java Champion and a co-founder of the IT consultancy Farata Systems and...
May. 28, 2016 11:00 AM EDT Reads: 4,071
Customer experience has become a competitive differentiator for companies, and it’s imperative that brands seamlessly connect the customer journey across all platforms. With the continued explosion of IoT, join us for a look at how to build a winning digital foundation in the connected era – today and in the future. In his session at @ThingsExpo, Chris Nguyen, Group Product Marketing Manager at Adobe, will discuss how to successfully leverage mobile, rapidly deploy content, capture real-time d...
May. 28, 2016 10:45 AM EDT Reads: 1,642
SYS-CON Events announced today that BMC Software has been named "Siver Sponsor" of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. BMC is a global leader in innovative software solutions that help businesses transform into digital enterprises for the ultimate competitive advantage. BMC Digital Enterprise Management is a set of innovative IT solutions designed to make digital business fast, seamless, and optimized from mainframe to mo...
May. 28, 2016 09:45 AM EDT Reads: 2,280
What a difference a year makes. Organizations aren’t just talking about IoT possibilities, it is now baked into their core business strategy. With IoT, billions of devices generating data from different companies on different networks around the globe need to interact. From efficiency to better customer insights to completely new business models, IoT will turn traditional business models upside down. In the new customer-centric age, the key to success is delivering critical services and apps wit...
May. 28, 2016 09:15 AM EDT Reads: 1,218