AT&T Inc. Downgraded To 'BBB' From 'BBB+' On Leverage Hike From Time Warner Acquisition; Outlook Stable

U.S.-based AT&T Inc. closed on its acquisition of diversified media company Time Warner Inc. for about $81 billion. We expect pro forma debt leverage will be about 3.5x, which is above our 3.25x threshold for the 'BBB+' rating. Because of the increase in leverage, we are lowering the corporate credit rating and senior unsecured debt rating on AT&T to 'BBB' from 'BBB+'. The stable outlook reflects our expectation for relatively flat adjusted EBITDA growth as secular industry declines and competitive pressures at AT&T are offset by solid EBITDA growth at Time Warner, as well as potential cost synergies over the next couple of years. Coupled with discretionary cash flow generation, we believe leverage will improve modestly over the next couple

...+ U.S.-based AT&T Inc. closed on its acquisition of diversified media company Time Warner Inc. for about $81 billion. + We expect pro forma debt leverage will be about 3.5x, which is above our 3.25x threshold for the '###+' rating. + Because of the increase in leverage, we are lowering the corporate credit rating and senior unsecured debt rating on AT&T to '###' from '###+'. + The stable outlook reflects our expectation for relatively flat adjusted EBITDA growth as secular industry declines and competitive pressures at AT&T are offset by solid EBITDA growth at Time Warner, as well as potential cost synergies over the next couple of years. Coupled with discretionary cash flow generation, we believe leverage will improve modestly over the next couple of years but will remain above 3.25x. While asset sales could accelerate the pace of debt reduction, the amount and timing are largely uncertain. NEW YORK (S&P Global Ratings) June 15, 2018--S&P Global Ratings today lowered its corporate credit...

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