Fitch Releases 2Q'12 U.S. Telecommunications & Cable Stats Quarterly Report
CHICAGO -- October 09, 2012
According to a new report issued today by Fitch Ratings, the U.S. Telecom and
Cable sector's liquidity and margins remain stable in the face of competitive
pressures and a slow growth environment.
Second-quarter liquidity remained strong, with 91% of committed facilities
available for borrowing and total liquidity exceeding aggregate 2012, 2013,
and 2014 maturities. Issuers in the portfolio have decreased aggregate 2012
and 2013 maturities by over $13 billion since first quarter 2012. Latest 12
months (LTM) free cash flow (FCF) improved in the second quarter to $34
billion, and issuers maintained balance sheet cash and short-term investment
balances of approximately $40 billion.
Margins have remained stable in the face of persistent competitive pressures,
and with minimal organic growth opportunities. Aggregate LTM EBITDA margins
declined 100 basis points (bps) year over year to 32%. Credit profiles are
steady as leverage is relatively unchanged from the previous year at 2.35x
from 2.42x. However, a few companies saw an increase in debt levels. Crown
Castle International Corp. increased leverage after closing on the NextG
Networks acquisition for $1 billion during April. DISH Network Corp. also
witnessed higher leverage after committing capital for a potential wireless
Issuers have continued to funnel FCF to shareholders in the form of dividends
and share repurchases. Dividends and share repurchases increased almost 3%
year over year to $5.72 billion from $5.57 billion. Fitch expects the issuers
to continue channeling excess FCF to shareholders in the near term.
A series of recently announced merger and acquisition activity within the
cable sector underscores the difficulty smaller operators are encountering in
generating organic revenue growth. Revenue growth and incremental
service-penetration gains of legacy products are slowing. Operators are faced
with maturing product and service portfolios and unrelenting competitive
pressures. Inorganic growth opportunities are emerging as a key element to
long-term growth strategies.
The full report 'Telecommunications & Cable Stats Quarterly -- Second-Quarter
2012' is available on www.fitchratings.com.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: U.S. Telecom and Cable Stats
Quarterly - Second-Quarter 2012 (Telecom and Cable)
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