CHICAGO, May 9 /PRNewswire/ -- Duff & Phelps Credit Rating Co. (DCR) is
formally upgrading the ratings of Telephone and Data Systems, Inc. (Amex: TDS)
and United States Cellular Corp. (U.S. Cellular) (Amex: USM) in the wake of
TDS' completed sale of its PCS subsidiary, Aerial, to VoiceStream Corp., which
was announced on May 4, 2000. DCR has raised TDS' senior unsecured debt
rating from 'BBB' (Triple-B) to 'A' (Single-A) and its TOPrS rating from 'BBB-
' (Triple-B-Minus) to 'A-' (Single-A-Minus). U.S. Cellular's senior debt
rating is raised from 'A-' (Single-A-Minus) to 'A+' (Single-A-Plus) and its
subordinated debt is raised from 'BBB+' (Triple-B-Plus) to 'A' (Single-A).
The ratings have been removed from Rating Watch-Up, and TDS' and U.S.
Cellular's Rating Outlook is Stable. Last November, DCR had assigned these
indicative ratings to TDS and U.S. Cellular in advance of the merger's close.
Today's moves formalize this rating action.
The sale of TDS' PCS business has significantly improved TDS' business and
financial risk position and reduced credit rating constraints on its
majority-owned wireless subsidiary, U.S. Cellular. Prospectively,
approximately two-thirds of TDS' cash flow will come from cellular and
one-third will come from local exchange services, with an asset concentration
in less-competitive suburban and rural markets. Although TDS is still
defining its future strategic direction, the company's credit profile and
commitment to credit quality befit that of an 'A' rated company. After
selling its stake in Aerial, the company has tremendous financial flexibility
with highly liquid publicly traded minority interest investments that far
outstrip its consolidated debt obligations. DCR expects U.S. Cellular to
continue to generate very strong credit measures for its rating category,
though we believe that these measures are necessary to offset the potential
volatility in its high-margin roaming revenue stream and to offset its higher
business risk profile as a result of its position as a regional player in a
business that is increasingly dominated by competitors with nationwide
coverage.
TDS is a telecommunications holding company with interests in the cellular
and telephone businesses.
SOURCE Duff & Phelps Credit Rating Co.
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CONTACT:
Michael P. Coutre, CFA, 312-368-3164,
coutre@dcrco.com, or Michael L. Weaver, 312-368-3156,
weaver@dcrco.com, both of Duff & Phelps Credit Rating Co.
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