S&P Cuts Credit Ratings for AT&T and Verizon
AT&T (T) and Verizon Communications (VZ) have become riskier credit propositions, according to Standard & Poor's, which lowered both companies' ratings on Monday.
S&P cut the two largest U.S. telephone companies' credit ratings to "A-" from "A," the Associated Press reported. Verizon had held its "A" rating, which is five notches below the top "AAA" rating, since 2005, while AT&T had maintained its "A" rating since 2004. Both companies were removed from S&P's "CreditWatch" list.
The ratings service cited long-term debt as the reason for the cut. By the end of September, Verizon had cut its long-term debt to $47.4 billion from $55.1 billion at the end of last year, while AT&T had reduced its long-term debt to $62.5 billion from $64.7 billion.
But S&P says the companies will likely have a hard time reduce their long-term debt further -- in spite of growth in their wireless businesses -- because of increased competition for revenue from cable television and other telecommunication services.
AT&T shares fell 0.7% to $28.30 on the news, while Verizon shares remained flat at $32.89.