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NEW YORK TELEPHONE $100 MILLION 7 PERCENT DEBENTURES RATED 'A+' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, April 23 /PRNewswire/ -- New York Telephone Co. (NYT)'s $100 million 7 percent non-callable debentures due 2013 are rated `A+' by Fitch. NYT will use proceeds from the sale to redeem $100 million 8-7/8 percent debentures due in 2015. The credit trend is improving.
 The rating reflects NYT's success in improving financial performance and credit quality measures despite an uneven economic recovery and intensifying competition in the New York region. Though the New York City economy has improved from its low point in 1991, demand for telephone service has not bounced back to pre-recession levels. Jobs cuts and cost containment programs, which depress telephone access line demand, drove financial improvements in the securities and media industries. In banking, retail, and manufacturing, access line demand remains sluggish. NYT's access lines grew 1.7 percent in 1992, lagging industry averages of approximately 3.0 percent. Nonetheless, line growth in 1992 demonstrated an improving trend from NYT's low 1 percent rise in 1991.
 In the slow economy, NYT improved financial performance with cost control measures, including substantial staff reductions. NYT cut the nonmanagement work force by 5,100 in the last quarter of 1991 and reduced managers by 1,200 in 1992, collectively decreasing staffing levels by approximately 15 percent and lowering the cost structure. Management plans further restructuring in 1993.
 Regulatory treatment in New York state has been relatively constructive over the past two years. New York State Public Service Commission (PSC) authorized a general rate increase of $250 million in 1991. The PSC also allowed NYT to retain earnings in excess of a predetermined return on equity and is considering incentive regulation with pricing flexibility. However, private line competitors are eroding NYT's market share. NYT's expense reduction and marketing focus have improved its competitive position.
 Earnings, measured by return of average equity, rose to 14.7 percent in 1992 from 9.1 percent in 1991, when results were depressed by non- recurring restructuring charges. Increased operating results helped boost interest coverage to 4.1 times (x) in 1992 from 3.6x in 1991. Cash from operations as a percent of total debt also showed improvement in 1992, rising to about 48 percent from 46 percent in 1991. NYT's debt leverage was about 41.8 percent at year end 1992, slightly down from 42.6 percent at the end of 1991. New York Telephone is a subsidiary of NYNEX Corp.
 -0- 4/23/93
 /CONTACT: Susan Kalla of Fitch, 212-908-0555/
 (NYN)


CO: New York Telephone Co. ST: New York IN: TLS SU: RTG

WB -- NY091 -- 0223 04/23/93 16:06 EDT
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Publication:PR Newswire
Date:Apr 23, 1993
Words:433
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