With the Federal Communication Commission’s auction for wide-band personal communications service licences in full swing, Standard & Poor’s Corp has evaluated the debt capacity of applicants at their current ratings, assuming that services will not yield much cash for at least two years after the start of the network’s construction. Pacific Telesis Group, seeking 99 licences in 51 markets, could add $700m of debt without compromising its A-plus rating and positive outlook. The other expected bidders for licences, their ratings, and their debt capacities are: AT&T double-A, none; Ameritech Corp, double-A-plus, $800m; BellSouth Corp triple-A, $300m; GTE Corp, triple-B-plus, $700m. PCS Primeco LP, comprising Airtouch Communications, triple-B-plus, $100m; US West Inc, A-plus, $600m; Bell Atlantic Corp A-plus, $400m; and Nynex Corp, single-A, $100m. Southwestern Bell Corp, single-A, $500m; Telephone & Data Systems Inc, triple-B, $150m; and Sprint Corp, triple-B, and a massive $1,200m debt capacity. However the debt capacities do not reflect the agency’s estimate of the bidding, nor the total amount companies may spend and if they exceed the specified ammounts, it will not necessarily trigger a rating or rating outlook downgrade. Ultimate rating impact of increased debt will depend on long-range financing plans.
