Fitch: U.S. Telecom Stability Driven by Slow Growth and Good Liquidity in 2013

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Fitch Ratings says that its 2013 outlook for the U.S. Telecommunications sector is stable driven by slow revenue growth improvements. In large part this growth reflects increasing data centric demand particularly associated with wireless data and wireline hosting and managed services. The stable outlook is also supported by the sector's strong liquidity and stable credit protection measures.

Fitch expects that EBITDA will rise in 2013 due to the continued capture of post-merger and acquisition synergies from transactions completed over the past couple of years. Partially offsetting this improvement is high handset subsidies associated with the latest iPhone release and the continued erosion of high margin legacy services.

Fitch expects that industry capital spending intensity, measured as capital expenditure divided by revenue, will retreat in 2013 and result in a relatively flat level of capital spending for the industry.

The industry was active in the debt markets in 2012, pushing out maturities and prefunding potential future investment requirements. As a result, liquidity is strong for the industry.

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