Sprint Nextel’s shares held steady despite a credit downgrade from Standards & Poor’s Rating Services.
The ratings agency lowered Sprint’s credit rating to BB- and said the company’s outlook was “negative” due to continued defection of the carrier’s postpaid customers.
Sprint’s stock rose 2 cents in early morning trading.
Sprint lost 3.54 million postpaid customers in 2009, bringing its total postpaid customer base to 33.96 million. The company’s overall subscriber base stands at 48.1 million customers thanks to growth in its prepaid segment and the acquisitions of iPCS and Virgin Mobile.
Standards & Poor’s financial analyst Allyn Arden said in a report the agency expects that growth in Sprint’s prepaid segment will fail to offset postpaid subscriber losses over the next year, resulting in lower overall sales.
“Despite growth in the prepaid segment and some modest improvement in
postpaid quarterly subscriber losses, [we] remain concerned that higher industry penetration levels and increased price-based competition will also hurt Sprint Nextel’s operating and financial performance in the near term,” Arden said.
Standards & Poor’s also cut ratings on the carrier’s subsidiary companies Sprint Capital and Nextel Communications, removing them altogether from CreditWatch. The two companies were placed on CreditWatch in November 2009 with “negative implications.”
Filed Under: Carriers
