Competition from much larger, better-capitalized incumbent telephone and cable companies Significant pricing pressure Lack of a sustainable competitive advantage Phaseout of intercarrier compensation (ICC), a material EBITDA contributor Potential savings from lower cost "last mile" connection Elevated leverage at about 8x Private-equity owned company with aggressive acquisition strategy Significant capital spending for alternative delivery technologies The stable rating outlook on U.S. TelePacific Holdings Corp. reflects our expectation for only modest revenue growth and relatively steady EBITDA margins. As a result, we expect the company to generate minimal free operating cash flow (FOCF) and for leverage to remain in the 8x area in 2013. There are negligible prospects for a rating upgrade. We believe that it is highly unlikely that the
