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Fitch: AT&T's Acquisition of Nextel Mexico to be Included in Existing Negative Watch
[January 27, 2015]

Fitch: AT&T's Acquisition of Nextel Mexico to be Included in Existing Negative Watch


Fitch Ratings does not anticipate taking an immediate rating action associated with AT&T's (News - Alert) plans to acquire the wireless operations of NII Holdings, Inc. in Mexico (Nextel Mexico) for $1.875 billion, less the outstanding net debt of the business at closing.

The transaction is expected to close in mid-2015 following the approvals by the U.S. Bankruptcy Court of the Southern District of New York and Mexico's telecom regulator. Further investment in Mexico has been expected, given AT&T's acquisition of wireless operator Iusacell (News - Alert) in January 2015 for $2.5 billion.

Currently, AT&T's 'A' Issuer Default Rating (IDR) and senior unsecured debt securities remain on Rating Watch Negative, where they were placed on May 19, 2014 upon the announcement of the acquisition of DIRECTV. DIRECTV's wholly-owned indirect subsidiary, DIRECTV Holdings LLC, has an IDR of 'BBB-'.

In addition to a review AT&T's financial policies after the DIRECTV transaction and the investments in Mexico, Fitch will also assess AT&T's spending in the Federal Communications Commission's (FCC (News - Alert)) AWS-3 auction. The FCC's auction is nearing completion, and industry-wide bidding is approaching $45 billion.

Fitch has previously stated that if the DirecTV (News - Alert) acquisition closes as proposed the rating is likely to be downgraded by one notch. To remain within the potential 'A-' category, Fitch believes AT&T would have the capacity to spend in the mid-teens of billions of dollars in the AWS auction and remain within the 'A-' rating.

Additional information is available at 'www.fitchratings.com'.



Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (May 28, 2014);


--'Telecommunications - Rating Navigator Companion' (Nov. 17, 2014).

Applicable Criteria and Related Research:

Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749393

Telecommunications: Ratings Navigator Companion

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=809869

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