Fitch: Video Deployment Could Stabilize Consumer Wireline Revenues for AT&T & Verizon

2008-05-15 23:47:56 -

- The video deployment plans of AT&T and Verizon will enable both companies to at least stabilize or possibly grow revenues in the consumer wireline business, according to Fitch Ratings. Both companies continue to face strong competition from cable MSOs and wireless operators.

In 2008, Fitch expects growing revenues from video services to enable AT&T and Verizon to sustain relatively stable consumer revenues in their wireline businesses. Fitch believes in the longer term and in a moderately growing economy, Verizon and AT&T could return to a moderate level of consumer revenue growth, with the growth supported by video service revenue growth and better access-line-retention rates.

'The successfulness of these strategies has been limited for both companies thus far,' said John Culver, Senior Director, Fitch Ratings. 'The video deployments have not yet reached the scale where they have succeeded in halting the decline in residential consumer lines.'

AT&T's strategy of deployment incorporates a moderate amount of risk, mainly due to the far lower cost than the deployment of a fiber-to-the-home network, as Verizon is deploying. Presently, there remains some uncertainty regarding the scaling of the network, although the acceleration of market roll-outs is an encouraging sign. Verizon's strategy, while costly, has resulted in strong initial penetration rates for its services. In addition, the company appears to be somewhat limited in the pace of the roll-out of services, with its deployment plans calling for approximately three million homes annually.

For more information, see Fitch's special report titled 'A Review and Update of AT&T's and Verizon's Video Strategies,' available on the Fitch Ratings web site www.fitchratings.com. The report provides some historical perspectives on the companies' strategies and key credit considerations for both issuers.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Fitch Ratings
John Culver, CFA, 312-368-3216
Michael Weaver, 312-368-3156 (Chicago)
Media Relations:
Brian Bertsch, 212-908-0549 (New York)