(Source: Business Wire)Fitch Ratings says while competitive forces and economic factors have slowed subscriber and revenue growth relative to historical performance across the U.S. telecommunications sector, financial strength and flexibility of the operators within the telecommunications sector yield relatively stable credit profiles. In a special report issued today, Fitch says operating results of the leading local exchange carriers (LECs), cable multiple system operators (MSOs), wireless service providers, and direct broadcast satellite (DBS) operators continue to reflect the depth of the economic recession and strong competitive pressure. While no business is immune to the effects of a recession, Fitch believes that the subscriber-based revenue model typically found in issuers will prove to be more defensive relative to other corporate issuers.

While Fitch acknowledges that the second quarter is seasonally a slow one for cable MSOs' subscriber activity, subscriber metrics for MSOs taken as a whole were poor relative to historical results and competition's current quarter subscriber metrics. Verizon Communications, Inc. led all the telecommunications service providers with the addition of approximately 744,000 revenue generating units (RGUs) during the quarter. RGU declines were prevalent across all cable MSO services and continue to reflect the difficult economic conditions and the broadening competitive overlap the cable MSOs face with AT&T and Verizon.

Trends identifying the scope and depth of the competitive overlap of leading telecommunications operators can be found in Fitch's 'U.S. Communications Industry Leaders Competitive Scorecard - Second Quarter 2009' special report. The report compares the competitive positions of the leading local exchange carriers (LEC), cable MSOs, wireless service providers and direct broadcast satellite (DBS) operators in addition to summarizing key operating metrics financial statistics, particularly related to key forecast items such as revenue growth, margin changes, capital reinvestment and debt. Additionally, the report includes summary comments concerning key developments in the quarter.

This quarterly report can be found on Fitch's web site at 'www.fitchratings.com' under:

Corporates >> Corporate Finance >> Special Reports

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

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