NEW YORK-Moody’s Investor’s Service Inc. downgraded certain outstanding debt of Mobile Telecommunication Technologies Corp., Jackson, Miss.
The New York-based rating agency downgraded its speculative grade rating to B3 from B2 on Mtel’s $265 million issue of 13.5 percent notes due 2002. It also changed its rating outlook to negative from stable.
“The downgrade and outlook change reflect Moody’s view that the paging industry is entering the early stages of market maturity and a prolonged period of intensifying sales competition,” said the Moody’s report, written by Robert N. McCreary, senior rating committee officer, and Dan Pakenham, senior analyst, both in the speculative grade ratings group.
Their report, issued after a review launched May 2, also said, among other things, the agency’s view reflects its belief that, “Mtel’s credit profile has weakened due to delays in the large-scale deployment of its strategically vital new two-way messaging product…(the possibility) that the market for [it] may not grow as quickly as the company anticipates*…*(and) the slowing of the growth rate of Mtel’s one-way SkyTel paging product.”
However, Moody’s also said it expects Mtel to “continue to post double-digit growth in net sales for fiscal year 1997.”
The rating agency cited as positive factors Mtel’s progress in expanding and diversifying its domestic and international distribution channels for all its products; improving the performance of its two-way paging product and obtaining or working toward strategic partnerships in the United States, Asia and Latin America.
