Radiate Holdco, LLC

The stable outlook reflects S&P Global Ratings' expectation for modest improvement in Radiate Holdco LLC's credit measures over the next year, mainly because of earnings growth, with debt to EBITDA between 5.7x-6.1x by the end of 2020 from about 6.6x currently. However, we believe at some point the company is likely to take on more debt given the aggressive financial policy employed by Radiate's private-equity owners, TPG Capital. We view a downgrade as unlikely over the next year given the company's deleveraging trajectory but could lower the ratings if debt to EBITDA were to rise above 7.0x for a sustained period, which we believe would most likely be caused by a more aggressive financial policy. We estimate it would take

...Rising earnings from growth in broadband revenue continues to facilitate the ability to de-lever over the next two years. Demand for faster internet connections should continue to spur growth in broadband pricing through 2020, which drops almost completely to the bottom line. As a result, we expect earnings growth of 8%-10% to enable the ratio of debt to EBITDA to be reduced by 0.5x per year from about 6.6x for the last 12 months ended June 30, 2019. Rating upside is limited by private-equity owner TPG's financial policy. While leverage could approach our upgrade trigger of 5.5x in 2021, we do not expect it be maintained at lower levels for a sustained period as evidenced by the recent $300 million debt-financed dividend. TPG could also make further acquisitions to gain scale, reduce costs, acquire fiber, or improve geographic diversity. New competition from 5G fixed wireless could slow the pace of earnings growth three to five years from now. We believe that new competition from Verizon...

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