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NEW ENGLAND TELEPHONE $225 MILLION 6-1/4 PERCENT NOTES RATED 'AA' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, March 4 /PRNewswire/ -- New England Telephone and Telegraph Co. (NET)'s $225 million 6-1/4 percent notes due 2003 are rated 'AA' by Fitch. The credit trend is stable.
 The rating reflects NET's success in sustaining strong credit quality measures despite considerable weakness in the regional economy. The lagging economy has resulted in job cuts in the region's high tech manufacturing sector and at various financial institutions. While demand for telephone service has not returned to the exceptional levels experienced in the mid-1980, the number of access lines increased at more than a 2 percent rate for the 12 months ending Sept. 30, 1992, compared with the meager 1 percent access line growth in 1991.
 In this weaker economy, NET has sustained its solid financial performance with more aggressive cost control measures, including significant staff reductions. NET reduced its employee levels by almost 9 percent in 1991, and the impact of those reductions will help sustain operating profits and credit quality.
 Regulatory treatment in the company's five-state service territory has been relatively constructive over the last three years. NET faces competition for toll service in Massachusetts, and regulators in Maine are moving to encourage more competition for local exchange telephone service. In an effort to position itself for this increased competition, NET gained some earnings and pricing flexibility from state regulators. Massachusetts regulators agreed to move basic local service and toll rates closer to costs, a step which will allow the company to compete more effectively on a price basis. Rhode Island regulators approved a four-year trial in which NET is allowed to change prices with changes in inflation.
 Profitability, as measured by return on average equity, rose to more than 14 percent on an annualized basis in the first three quarters of 1992 from 9.7 percent in 1991, when results were depressed by restructuring and force reduction charges. Increased operating results helped boost interest coverage to 4.8 times(x) in 1992 from 3.4x for 1991. Cash from operations as a percent of total debt also showed improvement in 1992, rising to about 45 percent for the first nine months of 1992. NET's debt ratio stood at about 43.1 percent at Sept. 30, 1992, about the same as at year-end 1991.
 The proceeds from this issue will be used to redeem $200 million of New England Telephone's 8.2 percent debentures. New England Telephone is a subsidiary of NYNEX Corp.
 -0- 3/4/93
 /CONTACT: Timothy Cain, 212-908-0587, of Fitch/
 (NYN)


CO: New England Telephone and Telegraph Co. ST: Massachusetts IN: TLS SU: RTG

LR -- NY095 -- 3100 03/04/93 15:40 EST
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Publication:PR Newswire
Date:Mar 4, 1993
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