Fitch cuts AT&T ratings

Fitch Ratings said it has downgraded the rating on AT&T Corp.'s senior unsecured debt to BBB- from BBB. In addition the company's commercial paper rating has been lowered to F-3 from F-2.

The outlook remains negative.

Fitch said the rating action reflects Fitch's concern over the continued negative operational trends within the company's core businesses, the sustained secular deterioration of the long distance industry as well as Fitch's belief that the company's 2004 revenue, EBITDA and free cash flow performance will be below Fitch's previous expectations.

The trends in revenue, EBITDA and free cash flow do not indicate any stabilization of the company's core businesses during 2004 and are not indicative of a BBB rated credit profile. From Fitch's view the unstable pricing environment coupled with heightened competition, the lack of telecom demand recovery and margin pressures will increase the relative business risk associated with AT&T's core businesses.

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