Fitch affirms Sprint Nextel's debt ratings at 'B+';outlook negative
Aug 06 - Fitch Ratings has affirmed the Issuer Default Rating (IDR) and long-term debt ratings of Sprint Nextel Corporation and its subsidiaries. The Rating Outlook for Sprint Nextel and its subsidiaries is Negative. A full list of ratings follows at the end of this release.
The ratings for Sprint reflect the on-going execution risk both operationally and financially regarding several key initiatives that the company expects will improve cash generation, network performance and longer-term profitability. Risks include achieving expected cost benefits associated with its network modernization, improving its competitive position with its 4G deployment, maintaining postpaid CDMA subscriber trends, improving iPhone dilution rates and retaining its Integrated Digital Enhanced Network (iDEN) subscribers.
Second quarter results show the company has generally managed these risks with improved CDMA churn, strong ARPU growth, better than expected iDEN subscriber retention and accelerated iDEN network shutdown. Consequently, Sprint Nextel materially increased EBITDA guidance for 2012. However, execution risk and cash burn rates will increase materially in the coming quarters as Sprint advances on its multi-faceted plans. The company's performance during the next two to three quarters will be a strong indicator whether Sprint Nextel can successfully navigate these risks, improve profitability and remain competitive.