S&P revises TDS outlook to negative

S&P said it revised its outlook for Telephone and Data Systems Inc. to negative from stable and affirmed all ratings, including its BB issuer rating.

TDS’ 84%-owned subsidiary U.S. Cellular continued to shed high-paid customers, which resulted in a steep EBITDA decline during the first quarter of 2023, the agency noted.

“Mature conditions in the U.S. wireless market have contributed to slower overall subscriber growth and more aggressive promotional activity. As a smaller, regional provider, U.S. Cellular lacks the scale to effectively compete with better-capitalized nationwide operators,” S&P said in a press release.

The agency said it forecasts TDS’ S&P Global Ratings-adjusted debt to EBITDA at 3.7x-3.8x in 2023, “although there is a greater risk that leverage could rise above 4x in 2023 or 2024, which is our threshold for the current rating.”

S&P warned the weaker outlook could mean a downgrade within the next 12 months if leverage climbs above 4x.

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