S&P downgrades NTTs

S&P said it lowered its ratings for Nippon Telegraph & Telephone Corp., subsidiary NTT Docomo Inc., and subsidiary NTT Finance Corp. two notches to A from AA-.

The agency also removed the ratings from CreditWatch with negative implications, where it placed them on Sept. 29. The outlook on the long-term ratings is stable.

“The downgrades follow NTT’s announcement today that it has completed the takeover of listed subsidiary NTT Docomo. We base the downgrades on the following view: While the deal will likely benefit NTT’s performance and operations through pooled management resources and disposal of overlapping assets, damage to its financial base will far outweigh the benefits because NTT will finance the acquisition cost with debt,” S&P said in a press release.

The outlook reflects the view that, although S&P forecasts the takeover to hurt NTT's financial soundness, the company will likely maintain a financial position commensurate with the ratings in the next one to two years thanks to a moderate reduction in debt, the agency said.

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