Cable's Strong Voice: Now S&P Is Killing Verizon

If there’s one group the financial community hates more than cable, it’s the telcos. Just 3 weeks after Moody’s downgraded Verizon’s long- and short-term ratings, S&P piled on, reducing ratings for the telco Fri. S&P’s reasons? Verizon is spending too much, losing too many subs and has too many competitors. This time the entire telco sector was bashed, not just Verizon. S&P put BellSouth and AT&T on CreditWatch for possible downgrade for the same reasons. "The cable industry, as a whole, has a limited track record in offering telephone service, but cable companies that have launched telephony have often garnered impressive market share," S&P said. It highlighted Cablevision, which signed 20% of its TV subs and 13% of HHs passed to phone contracts in its 1st two years of service. Most of Cablevision’s phone subs came from Verizon, S&P said. What should telcos do? Concentrate on increasing DSL penetration and upgrade systems, S&P said. "S&P views the potential for significant near-term loss of telephone customers to cable as far greater than the loss of cable customers to telephone companies," it added.