S&P Rates T-Mobile's (TMUS) Proposed Notes Offering at 'BB'

Standard & Poor's Ratings Services assigned its 'BB' issue-level rating and '3' recovery rating to T-Mobile's (NYSE: TMUS) proposed senior notes with maturities of 2023 and 2025 (amounts to be determined). The '3' recovery rating indicates our expectation for meaningful (50%-70%) recovery in the event of payment default.

We expect the company to use net proceeds for capital expenditures, the acquisition of spectrum in the upcoming auction of AWS-3 spectrum licenses, and the repayment of debt.

The 'BB' corporate credit rating on parent company T-Mobile US Inc. remains unchanged, as does the stable outlook. We estimate that pro forma debt to EBITDA will be in the mid-4x area and only modestly higher than the 4.4x as of June 30, 2014. Still, we believe that leverage could rise to the high-4x area over the next couple of years, depending on EBITDA growth and the ultimate level of spending in the upcoming spectrum auctions, although we expect that leverage will remain below 5x, with credit measures supportive of our "aggressive" financial risk assessment.

Deutsche Telekom AG (DT) owns a 67% stake in T-Mobile's common stock. We consider T-Mobile to be moderately strategic to DT and impute one notch of support to the corporate credit rating from the standalone credit profile of 'bb-'.

You May Also Be Interested In

• Wolfe Research Downgrades T-Mobile (TMUS) to Peerperform
• T-Mobile Expands Network Recovery and Customer Support Across Hawaiʻi Following Hurricane Lala
• UBS Starts Food Empire (FEH:SP) at Buy