Stable Cable: Fitch Sees Only Moderate Competition Next Year
At the NAMIC 25th gala last week, Comcast’s Brian Roberts complained that Wall St doesn’t like cable much. But at least some part of the financial community doesn’t hate cable. While it stopped well short of expressing undying love Fri, Fitch predicted a "stable" outlook for MSOs next year. These days, stable ain’t bad. Part of the reason for that outlook is because MSOs will face only moderate competitive pressure next year, Fitch says. It may have to take a harder look in ’07-’08, as the RBOCs become more firmly entrenched in their franchising areas, Fitch analysts said. MSOs will use free cash flow (which will remain flat or go down) mainly for stock buy-backs, they said. And capital spending will rise as MSOs will have to work harder to retain high value customers lured away by telcos, Fitch said. Fitch expects the RBOCs to hold their current ratings for ’06 and predicted a positive outlook. — Wireless: Residential line erosion is predicted to exceed 7% in ’06. That should help wireless EBITDA growth reach the high single-digit range in ’06. Fitch predicted financial improvement leading to positive rating actions, particularly for Sprint Nextel, Rogers and Telewest.