Qwest's increased cash
flow, decreased losses may spur Moody change
By Beth Potter, Staff Writer
Thursday, October 20, 2005
Qwest's cash flow is up and its long-distance losses are down, leading Moody's Investors Service to consider raising its rating on the phone company's debt.
For the past three years, Qwest has had a corporate rating of B2 on $17 billion of debt, or five levels below investment grade, Moody's said in a Wednesday statement.
"We're pleased with the Moody's announcement, as we have taken a disciplined approach to reducing debt, improving liquidity and increasing financial flexibility," said Chris Hardman, a Qwest spokesman.
"It's really positive, because Qwest has been buying back some of their debt," said Donna Jaegers, a telecommunications analyst at Janco Partners. "They're on target to do $2 billion in free cash flow next year."
Moody's will review Qwest's ability to reduce interest expense and maintain sales, its statement said.
On Oct. 4, UBS upgraded Qwest's stock to a buy from hold. Shares of Qwest rose 6 cents to $4.15 on Wednesday.
Bloomberg News contributed to this report.