Printer Friendly

BELL COS' UPGRADE PROPOSAL POSITIVE FOR CREDIT QUALITY, FITCH SAYS -- FITCH FINANCIAL WIRE --

 NEW YORK, April 16 /PRNewswire/ -- The Bell companies' proposal, announced yesterday, to invest $100 billion in network upgrades in exchange for a removal of restrictions on their businesses would position these companies to sustain credit quality in the face of an intensifying competitive threat, Fitch Investors Service says. The new lines of business would provide the companies with significant new sources of financial and operating strength.
 The Bells (seven regional holding companies created from the AT&T divestiture in 1984) are effectively restricted from participating in several of the fastest growing segments of the communications industry, including long distance telephone and cable TV service. Without these revenue and profitability opportunities, the Bells are unwilling to accelerate the upgrade of their network facilities. This investment would increase depreciation rates and would likely require the write-off of significant portions of their existing assets. The impact on profitability from these charges would not be acceptable to stockholders without the prospect of earnings growth from new services. State regulators have generally been reluctant to approve higher telephone rates necessary for these companies to recover massive new investment.
 The perceived need for a massive network upgrade becomes more urgent as the cable television industry positions itself to capture the market for high-margin entertainment service and interactive communications traffic. Most recently, Tele-Communications Inc. announced plans to spend $2 billion to deploy fiber optic cable throughout its network. In addition, wireless services, including the new Personal Communications Service, will take a growing share of the Bell's lower-margin voice communications business.
 It is uncertain whether Congress, the courts, or policy makers at the Federal Communications Commission (FCC) will move toward more flexible regulatory treatment of the Bells. Under the Bush administration, the FCC generally took a gradualist, incremental approach to policy change. Fitch expects the Bells to continue to press vigorously for the removal of these restrictions.
 -0- 4/16/93
 /CONTACT: Timothy Cain of Fitch, 212-908-0587/


CO: Bell companies ST: IN: TLS SU:

WB -- NY062 -- 6894 04/16/93 15:44 EDT
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Apr 16, 1993
Words:335
Previous Article:ONONDAGA COUNTY (N.Y.) GENERAL OBLIGATION BONDS 'AA', BANS 'F-1+' BY FITCH -- FITCH FINANCIAL WIRE --
Next Article:DUKE POWER $50 MILLION 6.75 PERCENT PREFERRED RATED 'AA-' BY FITCH -- FITCH FINANCIAL WIRE --
Topics:


Related Articles
SOUTHERN BELL, SOUTH CENTRAL BELL 'AAA' DEBT FITCHALERT NEGATIVE -- FITCH FINANCIAL WIRE --
BELLSOUTH TELECOM DEBT DOWNGRADED TO 'AA+' BY FITCH -- FITCH FINANCIAL WIRE --
COURT RULING CLEAR POSITIVE FOR LOCAL PHONE INDUSTRY, FITCH SAYS -- FITCH FINANCIAL WIRE --
TELE-COMMUNICATIONS 'BBB-' SENIOR DEBT ON FITCHALERT POSITIVE -- FITCH FINANCIAL WIRE --
TELE-COMMUNICATIONS 'BBB-' SENIOR DEBT AFFIRMED BY FITCH, OFF ALERT -- FITCH FINANCIAL WIRE --
NEW FITCH REPORT HIGHLIGHTS CABLE/TELECOMMUNICATIONS RATING GUIDELINES -- FITCH FINANCIAL WIRE --
NEW FITCH INDEX TARGETS CASH FLOW STRENGTH OF TELEPHONE COMPANIES -- FITCH FINANCIAL WIRE --
Fitch assigns positive outlook for BTMU, hinting at upgrades.
Fitch upgrades GIB's rating.
Good credit goes bad as economic slowdown starts to speed right up.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters