NOTE: On December 16, 2022, the press release was revised to correct the list of rated entities for which the principal methodology used was Media. Revised release follows.
New York, August 09, 2022 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings -and other ratings that are associated with the same analytical units for the rated entity(entities) listed below.
The review was conducted through a portfolio review discussion held on 2 August 2022 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. A possible outcome from periodic reviews is a referral of a rating to a rating committee.
This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement.
Key Rating Considerations
The principal methodology used for the rated entities listed below was Diversified Technology published in February 2022. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Diversified Technology
Scale: Larger scale can be an indicator of a company's ability to influence business trends and pricing within the industry and to support a stable or growing market position. Scale also can be an indicator of greater resilience to changes in product demand, geographic diversity, cost absorption, R&D capabilities and bargaining strength with customers and suppliers. Total revenue and reported EBIT are indicators of scale.
Business Profile: Business profile provides an indication of the likely stability and sustainability of the company's cash flows. End-market diversification is viewed positively because it mitigates the risk that a change in any individual industry or vertical market will significantly impair profitability and cash flow. Market share is an important component of business profile as it can indicate the level of competitive success, the depth of customer relationships and likely prospects for future performance. We assess market position, product differentiation and expected volatility in results.
Profitability and Efficiency: This rating factor assesses the level of control that a company has over its profit margins and management's effectiveness in using the levers available to it to preserve competitive profit margins in a way that creates strong and sustainable relationships with customers and consumers. EBITDA margin and Operating Income Return on Assets are indicators of profitability and efficiency.
Leverage and Coverage: Leverage and cash flow coverage measures provide indications of how much financial risk a diversified technology company is willing to undertake. These metrics are also indicators of a company's ability to sustain its competitive position, invest in growth opportunities and service debt. Measures of leverage and coverage include Debt/EBITDA, EBIT/Interest and Free Cash Flow/Debt.
Financial Policy: Management and board tolerance for financial risk is a rating determinant as it directly affects debt levels, credit quality, and the risk of adverse changes in financing and capital structure. Considerations include a company's public commitments in this area, its track record for adhering to commitments, and our views on the ability for the company to achieve its targets. Financial risk tolerance serves as a guidepost to investment and capital allocation.
Other Rating Considerations: Other considerations may include but are not limited to financial controls and the quality of financial reporting; corporate legal structure; the quality and experience of management; assessments of corporate governance as well as environmental and social considerations; exposure to uncertain licensing regimes; and possible government interference in some countries. Regulatory, litigation, liquidity, technology and reputational risk as well as changes to consumer and business spending patterns, competitor strategies and macroeconomic trends could also be considered.
• Apple Inc.
• Dell Inc.
• DMT Solutions Global Corporation
• Elo Touch Solutions, Inc.
• NetApp, Inc.
• Seagate HDD Cayman
• Western Digital Corporation
The principal methodology used for the rated entities listed below was Telecommunications Service Providers published in January 2017. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Telecommunications Service Providers
Scale: Scale is considered as it influences many of the core attributes that drive resiliency to stress. These attributes may include, among other aspects, the breadth of a company's customer base, the depth of its business, economies of scale, operational and financial flexibility, and greater pricing power. Scale can influence ability to harness business trends, support a stable or growing market position and withstand competitive pressures. For service providers in the telecommunication industry, scale can influence a company's ability to bundle products, and its ability to absorb a temporary disruption, acquisition, or misjudgment in the execution of capital investments. Scale is measured by total reported revenue.
Business Profile: Business profile can influence a company's ability to generate operating cash flows and the stability and sustainability of those flows. Core aspects of a business profile that drive success or failure typically include the depth and breadth of the company's product offering, its competitive environment, and the position it occupies in its operating markets. Some considerations include business model, competitive environment, technical positioning, regulatory environment, and market share.
Profitability and Efficiency: Profits are considered because they are necessary to maintain a business' competitive position, including sufficient reinvestment in marketing, research, facilities, and human capital. We consider the level and trajectory of operating margins and revenue together with their sustainability.
Leverage and Coverage: Leverage and coverage measures are considered as indicators for a company's financial flexibility and long-term viability. Financial flexibility is critical to respond to changing consumer preferences, regulatory changes, competitive challenges, and unexpected events. Key metrics include Debt/ EBITDA, Retained Cash Flow/ Debt and EBITDA minus Capital Expenditure/ Interest Expense.
Financial Policy: Management and board tolerance for financial risk is a consideration because it directly affects debt levels, credit quality, and the risk of adverse changes in financing and capital structure. Considerations include a company's public policy commitments, its track record for adhering to commitments, and our views on the ability for the company to achieve its targets. Financial risk tolerance serves as a guidepost to investment and capital allocation.
Other Considerations: Some other considerations include but are not limited to: our assessment of the quality of management, corporate governance, financial controls, liquidity, non-wholly owned subsidiaries, excess cash balances, event risk, and parental and institutional support.
• AT&T Inc.
• Consolidated Communications, Inc.
• Frontier Communications Holdings, LLC
• GCI, LLC
• Lumen Technologies, Inc.
• Telephone and Data Systems, Inc.
• T-Mobile USA, Inc.
• Verizon Communications Inc.
The principal methodology used for the rated entities listed below was Media published in June 2021. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Media
Scale: Scale is considered because it enables a media company to spread costs across a larger base of advertisers, distributors, or subscribers, obtain premium rates from advertisers and distributors, and negotiate more-favorable terms with content suppliers, talent, and other vendors. Scale is measured using total reported revenue.
Business Profile: The business profile of a media company provides insights into how competitive it is within its markets, whether it is gaining or losing market share, and how diversified it is. This factor is important because a company's pricing power, prospects for growth and ability to adapt to demand are meaningful drivers of its future cash flows. The business profile is assessed across three sub-factors: market position, market share trajectory and business model.
Leverage and Coverage: Leverage and coverage measures are indicators of a company's financial flexibility and long-term viability, including its ability to adapt to changes in the economic and business environment in the segments in which it operates. Among others, ratios such as Debt-to-EBITDA and EBITDA less Capex-to-Interest Expense are considered.
Financial Policy: Management and board tolerance for financial risk is considered because it directly affects debt levels, credit quality, and the risk of adverse changes in financing and capital structure. Our assessment of financial policies includes the perceived tolerance of a company's governing board and management for financial risk and the future direction for the company's capital structure. Considerations include a company's public commitments in this area, its track record for adhering to commitments, and our views on the ability of the company to achieve its targets. Many media companies have acquired other companies within and across media sub-sectors in order to consolidate their market positions, expand into new businesses or benefit from cost synergies. Given the limited growth opportunities in many traditional media sub-sectors, some companies face pressure to return cash to shareholders or develop new, faster-growth revenue streams. The quickening pace of technological change and the proliferation of competitors in online sub-categories could result in further M&A as companies seek to build scale, defend market share, acquire technical expertise, increase their subscriber base, or diversify their revenues.
Other Factors: Other factors may include, but are not limited to, financial controls and the quality of financial reporting; corporate legal structure; the quality and experience of management; assessments of corporate governance as well as environmental and social considerations; exposure to uncertain licensing regimes and possible government interference in some countries. Regulatory, litigation, liquidity, technology, and reputational risk as well as changes to consumer and business spending patterns, competitor strategies and macroeconomic trends also affect ratings.
• Gannett Co., Inc
• Thryv, Inc.
The principal methodology used for the rated entities listed below was Business and Consumer Services published in November 2021. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Business and Consumer Services
Scale: Scale is considered because larger scale can be an indicator of a company's ability to influence business trends and pricing within its service segments and to support a stable or growing market position. Scale also can be an indicator of greater resilience to changes in demand, geographic diversity, cost absorption, R&D capabilities and of greater bargaining strength with customers, labor, and vendors. Revenue is an indicator of scale.
Business Profile: The business profile of a company is considered because it greatly influences its ability to generate sustainable earnings and operating cash flows. The business and consumer service industry comprises a vast array of business models encompassing a multitude of identifiable customer bases worldwide. We consider the underlying demand characteristics of a company's service offerings and their relative breadth, strength, and endurance of demand. Companies that have established a long history of strong demand for a diverse range of service offerings that are critical to customer needs generally entail lower risk compared to those that offer a single line of service which have less importance for customer needs or have a limited history of success.
Profitability: Profits matter because they are necessary to maintain a business's competitive position, including sufficient reinvestment in marketing, research, facilities, and human capital. Sustained high profitability is generally a strong indicator of substantial competitive advantages, particularly if combined with evidence of a stable or rising market share. EBITA Margin is an indicator of profitability.
Leverage and Coverage: Leverage and coverage measures are indicators of a company's financial flexibility and long-term viability, including its ability to adapt to changes in the economic and business environment within the segments in which it operates. Indicators of leverage and coverage include ratios such as: Debt / EBITDA, EBITA / Interest Expense, and Retained Cash Flow/ Net Debt.
Financial Policy: Management and board tolerance for financial risk is a consideration because it directly affects debt levels, credit quality, and the risk of adverse changes in financing and capital structure. Our assessment of financial policies includes the perceived tolerance of a company's governing board and management for financial risk and the future direction for the company's capital structure. Considerations include a company's public commitments in this area, its track record for adhering to commitments, and our views on the ability for the company to achieve its targets. Financial risk tolerance serves as a guidepost to investment and capital allocation.
Other Rating Considerations: Other considerations may include but are not limited to financial controls and the quality of financial reporting; corporate legal structure; the quality and experience of management; assessments of corporate governance as well as environmental and social considerations; exposure to uncertain licensing regimes; and possible government interference in some countries. Regulatory, litigation, liquidity, technology, and reputational risk as well as changes to consumer and business spending patterns, competitor strategies and macroeconomic trends also affect ratings.
• CCI Buyer, Inc.
• Intermedia Holdings, Inc.
• Mavenir Systems, Inc.
• Syniverse Holdings, LLC
The principal methodology used for the rated entities listed below was Communications Infrastructure published in February 2022. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Communications Infrastructure
Scale: Scale can indicate a company's ability to influence business trends and pricing within its segments and to support a stable or growing market position. Scale can influence resilience to changes in demand or exogenous events, such as natural disasters, macroeconomic shocks, regional disruptions, or technological change. Revenue is an indicator of scale.
Business Profile: The business profile of a communications infrastructure company provides indications of the strength or weakness of its business model based on whether it owns or leases assets, its product and service offering, and the exclusivity of the location of its infrastructure. A communications infrastructure company's competitive environment and business conditions, including the stability and tenor of its contracts, also affects its ability to generate cash flow and raise external capital. Barriers to entry and long-term contracts with strong counterparties can foster stable cash flows. The degree of competition a company faces directly affects its pricing power and marketing expenses. Reliability, product differentiation, execution and competitive cost structures are also considerations.
Profitability and Efficiency: Profits are necessary in order for a company to reinvest in its business and maintain a competitive position, and sustained high profitability generally indicates a substantial competitive advantage. Funds from Operation(FFO) Margin, which is the ratio of FFO to revenue, is an indicator of profitability.
Leverage and Coverage: Leverage and coverage measures are indicators of a company's financial flexibility and long-term viability, including its ability to generate sufficient returns to maintain access to the capital markets. Given the capital intensity of the industry, companies that are able to finance projects with internally generated cash flow and external sources have an inherent advantage. Among others, ratios such as EBITDA minus Capital Expenditures/ Interest, Free Cash Flow/ Debt, and Debt/ EBITDA are indicators of leverage and coverage.
Financial Policy: Management and board tolerance for financial risk is considered because it directly affects debt levels, credit quality, and the risk of adverse changes in financing and capital structure. The company's desired capital structure or targeted credit profile, its history of prior actions, including its track record of risk and liquidity management, use of cash flow through different phases of economic and industry cycles, and its adherence to its commitments can serve as indicators of financial policy.
Other Considerations: Other consideration can include, but are not limited to, financial controls and the quality of financial reporting; corporate legal structure; the quality and experience of management; assessments of corporate governance as well as environmental and social considerations; exposure to uncertain licensing regimes; and possible government interference in some countries. Regulatory, litigation, liquidity, technology, and reputational risk as well as changes to consumer and business spending patterns, competitor strategies and macroeconomic trends are also considered.
• Cogent Communications Group, Inc.
• Conterra Ultra Broadband Holdings, Inc.
• FirstLight Holdco Inc.
• Logix Holding Company, LLC
• Uniti Group Inc.
The principal methodology used for the rated entities listed below was Guarantees, Letters of Credit and Other Forms of Credit Substitution Methodology published in July 2022. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Guarantees, Letters of Credit and Other Forms of Credit Substitution Methodology
Third-party credit support: The goal of third-party credit support is to substitute the credit risk of the support provider for the credit risk of the issuer. For credit substitution to be achieved, investors must be insulated from the risk of payment default by the underlying obligor. Generally, the long-term ratings on credit-supported transactions track the long-term rating assigned to the credit provider.
Additional Considerations: Credit substitution requires more than just the presence of a credit support instrument from a third-party credit provider. The transaction documentation provides clear instructions to ensure that payments under the credit support facility are made when due and that there are no impediments to the timely payment of debt service. The key elements evaluated include: mitigation of bankruptcy risk of issuer; sufficiency of credit support; structural provisions which provide for the timely payment of debt service; bondholders to be paid in full if credit support expiration or termination will result in a change.
• Frontier North Inc.
• Verizon California Inc.
• Verizon Florida Inc.
The principal methodology used for the rated entity listed below was Pay TV published in October 2021. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Pay TV
Scale: Scale provides indications of a company's revenue-generating capability, its overall market strength, its operating leverage, and geographic diversity. Scale can influence negotiating leverage with suppliers of programming and equipment, as well as marketing-related cost efficiencies. Scale can also impact ability to invest in new technology, spread fixed costs over more customers, and allow for more rapid innovation and deployment of new services, as well as time-to-market. Total reported revenue is an indicator of scale.
Business Profile: Business profile is considered because it influences the ability to generate operating cash flows, as well as the sustainability of those cash flows. Core aspects of a pay TV operator's business profile include its market position, the breadth and strength of its product offering, and its prospects for maintaining or improving its competitive position as the marketplace evolves.
Profitability and Efficiency: Profits are considered because they are needed to generate sustainable cash flow, maintain a competitive position, and reinvest in the business. Sustained high profitability generally indicates a competitive advantage. Some indicators of profitability and efficiency include Revenue and Subscriber Trends and Margin Sustainability, EBITDA/ Homes Passed, and Satellite Penetration.
Leverage and Coverage: Leverage and cash flow coverage measures provide indications of how much financial risk a pay TV company is willing to undertake. These metrics are also indicators of a company's ability to sustain its competitive position, invest in growth opportunities and service debt. Measures of leverage and coverage include Debt/ EBITDA, Retained Cash Flow/ Debt, Free Cash Flow/ Debt, and EBITDA minus Capital Expenditures/ Interest.
Financial Policy: Financial policy considers management and board tolerance for financial risk and commitment to a credit profile. It is an important rating determinant because it directly affects debt levels, credit quality, the future direction for the company and the risk of adverse changes in financing and capital structure. Financial risk tolerance serves as a guidepost to investment and capital allocation. Liquidity management is an important aspect of overall risk management and can provide insight into risk tolerance.
Other Considerations: Other considerations can include financial controls and the quality of financial reporting; corporate legal structure; the quality and experience of management; assessments of corporate governance as well as environmental and social considerations; exposure to uncertain licensing regimes; and possible government interference in some countries. Regulatory, litigation, liquidity, technology, and reputational risk as well as changes to consumer and business spending patterns, competitor strategies and macroeconomic trends can also be considered.
• Gridiron Fiber Corp.
The principal methodology used for the rated entity listed below was Software published in June 2022. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Software
Scale: Scale tends to be an indicator of success in developing breadth of customers and overall depth of business. It also typically confers economies of scale in research, engineering and development, and corporate overhead. Larger companies with strong cash flows also typically have greater access to capital markets and greater options in making acquisitions. Software companies often rely on acquisitions to obtain critical technology or promising product lines. Scale is measured by Revenue and Free Cash Flow.
Business Profile: The business profile factor provides an indication of a company's qualitative strength on several measures of diversification and our assessment of market share. Business Profile provides an indication of the likely stability and sustainability of the company's cash flows. To score highly on the factor overall, a company must score highly on both diversification and market share. A strong position in one of these areas with weakness in the other can limit long-term stability of cash flows.
Profitability: Profitability is a measure for the economic success of the business and the effectiveness of management. We assess this using Return on Assets.
Leverage and Coverage: Leverage and Coverage measures are indicators of a company's financial flexibility and long-term viability. Financial flexibility is critical to software companies to adapt to evolving technology and trends. Software companies need resources to invest in research and development as well as to make strategic acquisitions both to acquire critical technology and to expand product suites to meet shifting customer demands. Ratios such as Debt/ EBITDA, EBITDA minus Capex/ Interest Expense, Free Cash Flow/ Debt and Cash and Marketable Securities/ Debt are indicators of leverage and coverage.
Financial Policy: Management and board tolerance for financial risk is a rating determinant as it directly affects debt levels, credit quality, and the risk of adverse changes in financing and capital structure. Our assessment of financial policies includes the perceived tolerance of a company's governing board and management for financial risk and the future direction for the company's capital structure. Considerations include a company's public commitments in this area, its track record for adhering to commitments, and our views on the ability for the company to achieve its targets. Financial risk tolerance serves as a guidepost to investment and capital allocation.
Other Factors: Other factors may include, but are not limited to, financial controls, exposure to uncertain licensing regimes and possible government interference in some countries. Regulatory, litigation, liquidity, technology, and reputational risk as well as changes to consumer and business spending patterns, competitor strategies and macroeconomic trends are also considered.
• VMware, Inc.
This announcement applies only to Rated Entities with EU rated, UK rated, EU endorsed and UK endorsed ratings. Rated Entities, with Non EU rated, non UK rated, non EU endorsed and non UK endorsed ratings may be referenced herein to the extent necessary, if they are part of the same analytical unit.
Please see the Issuer page on https://ratings.moodys.com for each of the ratings covered, most updated credit rating action, rating history, and Credit Rating action Press Release including the rating rationale and factors that could lead to a rating upgrade or downgrade.
This publication does not announce a credit rating action.
For any credit ratings referenced in this publication, please see the issuer/deal page on https://ratings.moodys.com
for the most updated credit rating action information and rating history.
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