Fitch Releases Report: U.S. Telecommunications & Cable Stats Quarterly - Fourth Quarter 2011
According to a new report issued today by Fitch Ratings, the U.S. Telecom and Cable sector's liquidity has remained strong and margins have remained solid in the face of competitive pressures.
Fourth-quarter liquidity remained strong, with 87% of committed facilities available for borrowing and total liquidity exceeding aggregate 2012, 2013, and 2014 maturities by $12 billion. Latest 12 months (LTM) free cash flow (FCF) generated in the fourth quarter was $28 billion, and issuers maintained balance sheet cash and short-term investments balances of approximately $40 billion. This compares to Fitch-estimated 2012 maturity schedule of $13 billion.
Margins have remained relatively stable in the face of persistent competitive pressures. Aggregate LTM EBITDA margins declined 100 bps quarter-over-quarter and 140 bps year-over-year to 32.0%. Sprint Nextel Corp's LTM EBITDA margins suffered the largest declines in the portfolio with a 200 bps decline quarter-over-quarter and a 270 bps decline year-over-year, primarily resulting from increased iPhone subsidies as Sprint looks to improve its competitive profile. Rising subscriber acquisition costs could pressure margins in near-term until a rebalancing from ARPU expansion achieves scale.
Issuers have continued to funnel FCF to shareholders in the form of dividends and share repurchase. Dividends and share repurchases for 2011 increased by approximately 13% and 39%, respectively, from 2010. Fitch expects issuers to continue channeling excess FCF to shareholders in the near term, especially as capital intensity rates have leveled off to normalized rates and acquisition activity has remained tepid since the first half of 2011.
Fitch Ratings published its 'Telecommunications and Cable Stats Quarterly' report on April 30, 2012. This report provides a summary of four years of operating performance, credit metrics, and liquidity positions of the companies in this sector of Fitch's rating universe over the past four years, as well as key credit strengths and concerns as of the end of fourth quarter of 2011.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research: Telecom and Cable Stats
Quarterly -- Fourth-Quarter 2011
Adam Dolkart, +1-312-368-2095
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Mike Weaver, +1-312-368-3156
Brian Bertsch, +1-212-908-0549
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