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Nextel, Sprint Get Rating Boost

Posted on: Thursday, 18 August 2005, 00:00 CDT

Aug. 17--Citing their strong wireless businesses, Standard & Poor's on Tuesday raised its debt ratings on Sprint Corp. and Nextel Communications.

S&P Ratings Service raised Sprint's rating by three notches, moving the company off the service's CreditWatch list.

Sprint moved to A- from BBB-.

Nextel's rating was raised four notches, from BB+ to A-.

The service said the outlook for Sprint Nextel Corp. was stable, noting its combined $24.7 billion in debt.

Ratings from S&P and other bond rating services are used to judge a company's financial ability to make interest payments and repay loans. Higher ratings help companies borrow in the public markets at lower interest rates.

"The upgrades are based on the continuing operating and financial improvement of Sprint and Nextel's wireless operations, a strong business profile largely derived from growing national wireless services that will result after the combined company spins off Sprint's stagnant local exchange operations, and an intermediate financial risk profile," said Eric Geil, a credit analyst for S&P.

S&P said Sprint's local telephone division, which serves 7.5 million lines and will be the nation's largest independent local telephone company, will remain on "CreditWatch with negative implications."

Sprint plans to spin off its local operation next year. The company said Monday that the still-unnamed spinoff would have about $7.25 billion in debt and pay about $300 million in dividends yearly.

The lower rating on the local operation reflects "the potential that the proposed standalone local company could be rated below investment grade."

Shares of Sprint dropped Tuesday for the second straight day. Now traded under the "S" symbol, Sprint shares dropped 19 cents, closing at $25.86.

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S, MHP,

Source: The Kansas City Star (Kansas City, Missouri)

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