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Cable Technology Feature Article

December 28, 2009

Economy & Competition Contribute to Weak Telecom & Cable Performance in Q3: Report

By Jai C.S., TMCnet Contributor

Fitch Ratings, a global rating agency providing independent and prospective credit opinions, research and data, recently released a report – “Telecommunications and Cable Stats Quarterly--Third Quarter 2009,” which indicates weak macroeconomic conditions and increasing competitive pressures as the prime contributor for the weak performance of the U.S. telecommunications and cable sector in the third quarter 2009.
Published on Dec. 15, the report is said to deliver a summary of four years of operating performance, credit metrics, and liquidity positions of the companies in this sector of Fitch's rating universe over the past four years, as well as key credit strengths and concerns as of the end of the third quarter 2009.
Additionally, the report also clarifies another key point which the company believes that poor housing and high unemployment - which are closely linked to telecommunications and cable demand, to persist for the rest of 2009 and well into 2010.
Research officials with Fitch Ratings said that telecom and cable demand has traditionally lagged recoveries following macroeconomic downturns, and Fitch expects this lagging trend to prevent any U.S. economic recovery in 2010 from being realized by this sector until 2011. Fitch expects the effects of ever-growing competitive overlap of services among telecommunications and cable companies to continue to materially impact near-term results and longer-term prospects for companies in this sector.
Although operating performance was weak for most of the sector, several companies accessed the capital markets toward the end of the third quarter and into the fourth, extending maturities of term loans and revolving credit facilities and refinancing near-term maturities of existing debt.

Jai C.S. is a contributing editor for TMCnet. To read more of Jai's articles, please visit his columnist page.

Edited by Kelly McGuire