S&P analysts don't see wireless credits improving for 18-24 months

By Ronda Fears

Nashville, Tenn., June 17 - Investors looking for a turnaround in the wireless group of telecom credits will likely have to wait up to two years, said S&P credit analysts in a conference call Monday to discuss the agency's downgrades of Sprint and WorldCom.

"I don't see it improving anytime soon, in the next 18 to 24 months," said S&P analyst Rosemarie Kalinowski when asked specifically when the rating agency foresees a turnaround in wireless.

Aggravating concerns about the highly leveraged group of wireless credits are conditions such as the economic recession and its slow recovery, as well as inefficient churn rates and competition.

S&P downgraded WorldCom on Monday, cutting the long-term ratings to B+ from BB, and Sprint on Friday, lowering the long-term ratings to BBB- from BBB+.

AT&T Wireless and others in the group are being reviewed right now, S&P analysts said.

"There will be a few others in the wireless group that we will be taking a look at," Kalinowski said.

A couple of participants of the call from the investment community commented that there did not seem to be anything substantially different in S&P's commentary about the two names, so they were curious about what prompted the downgrades.

S&P analyst Richard Siderman said some of the impetus was a fundamental change in the rating agency's opinion about the worth of assets in the wireless group.

"It is very clear that this is a troubled business," Siderman said.

"This if different from a Qwest, where people would be lined up to buy access lines."

The value assigned to wireless was taken down to a more distressed level, he said, which impacted coverage ratios and pressured the credit ratings.

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