The ratings on Los Angeles-based competitive local exchange carrier (CLEC) U.S. TelePacific Holdings Corp. (TelePacific) reflect a "highly leveraged" financial risk profile (as defined in Standard&Poor's Ratings Services' criteria), including operating lease-adjusted leverage of about 7.6x. The ratings also reflect a "vulnerable" business risk profile (as defined in our criteria) stemming from substantial competition from larger and better capitalized incumbent telephone companies and cable operators, pricing pressure, a lack of sustainable competitive advantages, low barriers to entry, integration risk associated with recent acquisition activity, and market concentration. Tempering factors include growth opportunities from recent investments and acquisitions as well as low penetration levels. Our ratings incorporate some of the following assumptions: Low- to mid-single-digit revenue growth, excluding acquisitions,
