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Fitch Assigns 'BBB+' Rating to Comcast Notes; Outlook Stable

Posted on: Tuesday, 28 February 2006, 12:00 CST

Fitch Ratings has assigned a 'BBB+' rating to Comcast Corporation's (Comcast) $2.25 billion offering of senior unsecured notes. The offering is structured with two tranches, the first of which consists of $1.0 billion of senior notes maturing in March 2006 and the second includes $1.250 billion of notes maturing March 2037. The proceeds from the offering are expected to be used to reduce outstanding commercial paper balances and for general corporate purposes. The Rating Outlook for all of Comcast's ratings is Stable. As of the end of 2005, Comcast had approximately $23.4 billion of debt outstanding.

The offering is consistent with Fitch's expectations that the company refinance its scheduled maturities during 2006. Additionally, Fitch believes that total debt will increase during 2006 allowing for the financing of the Adelphia and Susquehanna Cable transactions. Comcast's leverage metric as of the end of 2005 was 2.75 times (x). Fitch expects that the pace of credit metric improvement will slow somewhat during 2006 as the company's financial policy continues to shift away from debt reduction to focus on returning capital to shareholders. During 2005 Comcast repurchased approximately $2.3 billion of its common stock and following board approval of an additional $5.0 billion share repurchase program, Comcast has approximately $5.4 billion of share repurchase capacity.

Overall Fitch's ratings continue to reflect Comcast's competitive position as the largest multiple systems operator (MSO) in the country that is well positioned to generate solid operating metrics, sustainable EBITDA and free cash flow growth over Fitch's rating horizon in an operating environment that Fitch anticipates will be increasingly competitive. From Fitch's perspective Comcast's continued penetration of advanced digital video services and the growth of high-margin, high-speed data services coupled with the introduction of digital telephone service and the introduction of wireless services drives the diversification of the company's revenue-generating units, increases average revenue per user (ARPU) and importantly strengthens the company's overall competitive position. Fitch believes that Comcast's scale uniquely positions the company to lower its programming costs and drive further operating cost efficiencies within its cable plant as well as providing internally generated content and entering into key investments or partnerships with content providers and vendors, which affords Comcast a competitive advantage.

Fitch's Stable Rating Outlook reflects Fitch's expectation for Comcast to maintain credit quality and financial flexibility indicative of its 'BBB+' rating category, the continuation of strong operating metrics and the unfettered integration of the Adelphia, Time Warner Cable and Susquehanna Cable subscribers. A more aggressive financial policy such as debt financed share repurchases or special dividends or an erosion of the company's operating metrics due to competitive factors could lead to a revision of the company's Rating Outlook.

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.

Source: Business Wire

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