S&P rates Bell Canada notes BBB+

Standard & Poor's said it assigned a BBB+ debt rating to Bell Canada's proposed C$1 billion 3.6% series M-21 medium-term debentures due Dec. 2, 2015.

The notes will be guaranteed by Bell Canada's parent, BCE Inc. (BBB+/stable).

Proceeds will be used for general corporate purposes, including to pre-fund debt repayments. The ratings on Bell Canada are consolidated with those on its parent BCE.

"The BBB+ corporate credit rating and stable outlook on both Bell Canada and BCE, Canada's largest integrated telecommunications provider, reflect our view of BCE's satisfactory business risk profile, given its large and expanding nationwide wireless operations and strong market position as the incumbent telecom service provider in the provinces of Ontario and Quebec," S&P analyst Madhav Hari said in a statement.

Ratings also reflects the company's broad product portfolio, solid brand recognition, broad distribution and healthy diversity of revenues among business and residential customers, according to the agency.

Ratings are supported by the view that Bell Canada should be able to sustain credit metrics supportive of an intermediate financial risk profile, that it will adhere to a moderate financial policy and that it will maintain strong liquidity for the ratings, the agency said.

Tempering factors include Bell Canada's exposure to high-margin voice and legacy data revenue, strong competition from cable operators in the residential segment, increasing competition in wireless from new entrants and high capital expenditures required to sustain its market position, the agency noted.

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