KEY RATING DRIVERS
--While leverage will be outside an appropriate range for an 'A-' rating for several years, Fitch believes metrics will return to a level appropriate for the rating due to VZ's strong position in the wireless industry and the significant cash flows generated by the wireless business. This is in combination with VZ management's commitment to delever, as evidenced by the aggressive delevering following the acquisition of
--A key to debt reduction over the next several years will be the continued generation of strong free cash flow (FCF) at VZW. VZW's simple FCF (EBITDA less capital spending) for the LTM ending
--The strong competitive position of VZW as evidenced by industry-low churn rates, high margins and the most developed LTE network in the U.S. support expectations for VZ's cash flow stability and the longer rating horizon embodied in the rating.
VZ's liquidity is supported by its consolidated cash balances, which were
To provide additional liquidity, a
In 2014, Fitch expects consolidated capital spending to range from
Fitch believes a positive rating action is unlikely in the foreseeable future, given the leverage incurred in the Vodafone transaction.
Conversely, Fitch may take negative rating action if:
--Operating performance causes delevering to take place at a materially slower than anticipated pace;
--A weakening of VZW's competitive position that would jeopardize the stability of cash flows.
Additional information is available at 'www.fitchratings.com'.
--'Corporate Rating Methodology' (
--'Rating Telecom Companies - Sector Credit Factors' (
Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage
Rating Telecom Companies
Source: Fitch Ratings
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