Fitch affirms TDS, USM

Fitch Ratings said it affirmed Telephone & Data Systems, Inc. and United States Cellular's BBB+ issuer default and senior unsecured debt ratings and removed them from Rating Watch negative.

Fitch also assigned a BBB+ rating to TDS and USM's revolving credit facilities.

The outlook is stable.

Fitch placed the ratings on negative watch in November 2005 following an announcement that TDS would restate several years of financial statements.

While the company's accounting issues caused material uncertainty regarding internal controls and accounting systems, the financial restatements did not lead to a negative impact on revenue, cash flow or liquidity, according to the agency.

The rating affirmation reflects the company's progress in correcting its accounting deficiencies, the past de-leveraging efforts, the growing profitability in its wireless operations and the increasing free cash flow at a consolidated TDS, Fitch said.

The issuer's financial profile is expected to improve over the forecast period, with a total debt with equity credit-to-EBITDA ratio below 1.5 times by the end of the year, the agency said.

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