S&P ups Iowa Telecommunications outlook to stable

Standard & Poor's said it revised the outlook on Iowa Telecommunications Services Inc. to stable from negative and affirmed its ratings, including the BB- corporate credit rating.

The agency said that the outlook change reflects its expectations that the company will be able to withstand increasing competition from cable operators while maintaining credit metrics consistent with the current rating category.

The ratings on Iowa Telecom reflect an aggressive, shareholder-oriented financial policy with a commitment to a substantial dividend that limits potential debt reduction, a business that is experiencing moderate access-line losses because of some wireless substitution and competition from competitive local exchange carriers, aggressive leverage, at 4.1x debt to last-12-month EBITDA, adjusted for operating leases and pension liabilities and minimal growth opportunities for the mature rural telephone business, S&P noted.

Tempering factors include the rural nature of much of Iowa Telecom's service territory, which provides greater protection compared with major market operators, the growth potential from data services, limited vulnerability to potential regulatory changes and adequate liquidity, S&P added.

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