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AT&T 'AA-' DEBENTURES ON FITCHALERT NEGATIVE AFTER MCCAW ANNOUNCEMENT -- FITCH FINANCIAL WIRE --

AT&T 'AA-' DEBENTURES ON FITCHALERT NEGATIVE AFTER MCCAW ANNOUNCEMENT
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Nov. 5 /PRNewswire/ -- American Telephone & Telegraph Co.'s $5.2 billion 'AA-' debentures are placed on FitchAlert with negative implications following the company's proposed purchase of a 33 percent ownership stake in McCaw Cellular Communications, Inc.
 Under the proposed agreement, AT&T would purchase 47 million shares of newly issued McCaw common stock at $42 per share. AT&T would also purchase British Telecom's 36 million shares of McCaw stock at about $49 a share, bringing AT&T's investment to about $3.72 billion. AT&T also would have an option to acquire voting control of McCaw Cellular for $100 million. AT&T would pay $600 million, plus interest, to exercise that option.
 Although Fitch recognizes the potential long-term strategic benefits to AT&T from this alliance, the financing arrangements and additional debt, if any, have not been determined. Despite its aggressive investment in financial services businesses, including the Universal card operations, AT&T reduced its overall debt levels over the last year. Fitch's review will focus on any additional debt resulting from the McCaw investment and on the transaction's impact on overall financial results and credit quality measures, including profitability and interest coverage.
 Fitch believes that this investment in McCaw will position AT&T to benefit from the rapidly growing wireless communications market. McCaw Cellular is the largest cellular service provider in the nation. The cellular market is the fastest growing telecommunications market segment, posting more rapid growth than the long-distance business, where AT&T still maintains market leadership.
 As part of this investment, AT&T and McCaw would form a strategic alliance involving marketing and technological cooperation. With its 400 "Phone Center" retail outlets, AT&T would bring additional distribution channels to McCaw's cellular operations. The use of the AT&T brand name will help strengthen McCaw's marketing effort. In an industry where technical developments can offer competitive advantage, McCaw would have access to the research and development resources of AT&T Bell Laboratories.
 -0- 11/5/92
 /CONTACT: Timothy Cain of Fitch, 212-908-0587/
 (T MCAWA) CO: American Telephone & Telegraph Co.; McCaw Cellular Communications, ST: New Jersey, Washington IN: TLS SU: RTG


CK -- NY094 -- 7738 11/05/92 12:50 EST
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Publication:PR Newswire
Date:Nov 5, 1992
Words:378
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