S&P Downgrades Frontier Communications

Standard & Poor's Rating Services has changed its assessment of Frontier Communications' (NASDAQ: FTR  ) financial risk profile from "significant" to "aggressive," causing the ratings agency to downgrade the telecommunications company even deeper into what's considered junk territory.

S&P lowered Frontier's rating from "BB" to "BB-", which drops the company three steps below investment grade.

Frontier's prospects, according to S&P, are constrained by a combination of tough wireline competition and the trend away from wireline toward wireless communication. The third quarter saw Frontier take a 3% hit in revenue and a 5% decline in EBITDA over the same period last year caused by annual access line losses of around 8%.

However, S&P does see Frontier's outlook as stable if it can maintain leverage in the low four-times EBITDA range. Frontier's rating could go up if it can lower its debt to EBITDA, S&P said, but because of the company's expected low cash flow after it pays off its dividend, S&P sees this as unlikely.

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  • Report this Comment On January 31, 2013, at 4:43 PM, ir4getful wrote:

    Was the downgrade determined before or after FTR paid off over half billion dollars in senior debt? It was just announced in the last few days.

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