Verizon Scuffles With S&P
It's fair to say that Verizon Communications Inc. (NYSE: VZ) did not take kindly to a Standard & Poor's announcement today that the RBOC's long-term ratings had been placed on "watch negative" because of general market conditions (see Verizon Put on Watch Negative).
According to the operator's CFO, Doreen Toben, Verizon has done more than enough to avoid this sort of action, and Doreen's just not gonna take this lying down (see Verizon Hits Back at S&P). After all, this puts Verizon in the same category -- "CreditWatch with negative implications" -- as BellSouth Corp. (NYSE: BLS) and SBC Communications Inc. (NYSE: SBC), and that simply won't do.
"We believe S&P's action today is unwarranted, and we look forward to meeting with S&P to review how we have consistently differentiated ourselves within our sector," says Toben. "We have already reduced total debt by more than $18 billion over the past two years," and "during this time, our wireless business has stood head-and-shoulders above the rest of the industry, and we are continuing to widen our lead in this profitable growth market as others are scrambling to try to keep up."
The S&P team is having none of it, though. It reckons the RBOCs are set to face continuing pressure in the coming years from competitve UNE-P players, wireless substitution, and the cable operators. So although they have "formidable strengths and some potential prospects for growth," it's going to be tough for the RBOCs to maintain a high "A" rating, says S&P.
The market reaction? Verizon's share price slipped slightly, down 19 cents to $36.20.
— Ray Le Maistre, International Editor, Boardwatch