Citing continued strong operating results, Moody’s Investors Service upgraded its credit rating on Nextel Communications Inc. one notch, assigned a B2 rating to the carrier’s recently announced $1 billion notes offering and placed a “stable” outlook on its ratings.
Moody’s said the credit upgrade reflects “the continued outperformance the company has achieved with revenue per user continuing to remain well above the industry average, churn well below average, and subscriber growth also better than the competition, all of which has helped the company generate free cash flow in each of the past four quarters.”
Nextel reported second-quarter results last week, including higher-than-forecast customer additions, industry-leading 1.6-percent customer churn and $69 in average revenue per user.
Moody’s also noted its upgrade was the result of improvements to Nextel’s balance sheet, including the repurchase of $3.7 billion of senior notes and preferred stock and the improvement of the maturity profile of Nextel’s debt through the repurchases and refinancing expected from the pending note offering.
The ratings agency added that it does not expect the pending introduction of wireless local number portability or competing press-to-talk service offerings from Nextel’s competitors to negatively affect the carrier in the short term. In addition, Moody’s said the acceptance of Nextel’s proposed spectrum realignment Consensus Plan by the Federal Communications Commission would bring “tremendous” long-term benefits to the carrier by clearing its currently muddled spectrum position.
Fitch Ratings made a similar upgrade of Nextel’s credit rating last week, citing the carrier’s progress in deleveraging its balance sheet and positive operational trends.
