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By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

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Related Issuers
Rating Action:

Moody's rates MetroPCS new term loan Ba1

04 Mar 2011

Outlook still positive

New York, March 04, 2011 -- Moody's Investors Service has assigned a Ba1 rating to MetroPCS Wireless, Inc.'s ("MetroPCS" or "The Company") new $1.5 billion term loan. MetroPCS plans to amend the terms of its Ba1 rated senior secured credit facility, increasing its size by $1.5 billion in new debt that will mature in 2018. The company plans to use the proceeds to retire $540 million outstanding under the credit facility that was scheduled to mature in 2013 and to create the financial flexibility to pursue spectrum acquisitions. Moody's has also affirmed our positive outlook, reflecting the MetroPCS's strong performance and expected improvements in credit profile relative to its B1 Corporate Family Rating (CFR).

MetroPCS Wireless, Inc.

Corporate Family Rating.B1

Probability of Default Rating.B1

Sr. Secured RCFBa1, LGD-2 (19%)

Sr. Secured Term LoansBa1, LGD-2 (19%)

Sr. Unsec. Notes...B2, LGD-5 (75%)

SGL / Short-Term Rating..SGL-1

Outlook.. Positive

RATINGS RATIONALE

Moody's has assigned a Ba1 rating to MetroPCS new $1.5 billion senior secured term loan due 2018. The new term loan will be issued through an amendment and extension of the company's current credit facility. The company plans to use the proceeds of the new term loan to repay its existing $540 million outstanding senior secured term loan due in 2013 and to position itself to have the financial flexibility to opportunistically purchase additional spectrum assets over the next 12-18 months. The amendment to the credit faclity will also increase the revolving credit facility to $105 million from $67.5 million prior and loosen the agreement's financial covenants. Following this refinancing action, MetroPCS will have no material debt maturities before 2016 and a cash balance exceeding $2.0 billion.

Moody's continues to believe that MetroPCS will seek to acquire additional spectrum capacity as it grows its subscriber base of 3G and 4G data customers. We project that the company will spend approximately $1.0 billion over the next 12-18 months to acquire this needed spectrum. However, this investment will offset capital spending which would otherwise be required to increase network density as spectrum utilization became constrained.

Moody's maintains a positive outlook on MetroPCS based on its strong growth and lower churn despite an environment that is increasingly competitive due in part to U.S. wireless penetration nearing 100%. In addition to solid execution, the positive outlook reflects our view that the company's credit metrics will continue to improve from strong growth, low churn and stable ARPU and margins. Moody's believes that MetroPCS's operating performance will result in modest deleveraging and a meaningful improvement in free cash flow. We project that leverage, measured as Debt to EBITDA (Moody's adjusted), will increase slightly to approximately 4.0x at year-end 2011, but will fall to approximately 3x by year end 2013 as a result of EBITDA growth. Free cash flow as a percentage of debt is projected to approximately double to 10% during this timeframe.

Moody's Senior Vice President Dennis Saputo commented, "MetroPCS is a mini-juggernaut, growing at a pace higher than the industry average while transforming into a strong cash-generating business." Moody's anticipates that MetroPCS will accumulate a significant cash position over the next 2-3 years as capex declines and margins expand, both at a modest pace.

MetroPCS's B1 CFR reflects the positive factors referenced above, offset by the company's small scale and the intensely competitive status of the wireless communications industry. MetroPCS's price-centric strategy could be duplicated by peers, many of which are much larger and better capitalized. Although Moody's feels that the industry has exhibited price discipline, the potential exists for competitors to undercut MetroPCS to gain market share while sacrificing margins. Additionally, the network costs incurred by the growth in data services could adversely impact profitability.

The $1.5 billion senior secured term loan is rated Ba1 (LGD-2, 19%), three notches above the company's B1 CFR due to the senior secured status of the debt and the loss aborption offered by MetroPCS's existing $2.0 billion of unsecured notes (rated B2, LGD-5).

MetroPCS's rating could be moved up if the company continues on its current growth trajectory while keeping churn and pricing stable, which would result in rapidly increasing earnings and cash flows. Specifically, Moody's could raise MetroPCS's rating if its leverage is likely to approach 3.0x amid stable EBITDA margins and if free cash flow were to improve to between 5% to 10% of total debt (note that all cited financial metrics are referenced on a Moody's adjusted basis).

Downward rating pressure could develop if the Company's leverage trends toward 4.5x or if free cash flow falls below 2% of total debt. In addition, lower EBITDA margins, declining to below 30% on a sustained basis or a significant deterioration in its liquidity profile could pressure the rating downward.

Moody's last rating action for MetroPCS was on November 5, 2010 when the company's $1.0 billion senior unsecured notes were rated B2 and the company's outlook was revised to positive from stable.

The principal methodologies used in this rating were Global Telecommunications Industry published in December 2010, Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009, and Speculative Grade Liquidity Ratings published September 2002

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

New York
Dennis Saputo
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
John Diaz
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's rates MetroPCS new term loan Ba1
No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
Moodys.com