S&P puts TDS on developing watch

S&P said it placed its BB issuer ratings for Telephone and Data Systems Inc. and its subsidiary United States Cellular Corp. on CreditWatch with developing implications.

TDS reported it is exploring its options for U.S. Cellular.

“The developing CreditWatch placement on TDS reflects the potential for a higher or lower rating depending on the outcome of the strategic review for U.S. Cellular. We view the announcement favorably given that U.S. Cellular's operations are sub-scale relative to its peers and have weaker margins, making it difficult to compete in an increasingly competitive and mature wireless industry.

“Nevertheless, the U.S. Cellular business also benefits from a portfolio of 4,341 towers as well as minority stakes in various wireless partnerships with Verizon and AT&T, including its Los Angeles partnership with Verizon. It is unclear whether TDS would keep or sell these assets as part of any transaction,” the agency said in a press release.

S&P said it aims to resolve the developing watch after TDS completes its review and it has more information.

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