Verizon’s debt rating was cut today by Moody’s. They cited cash flow pressures from upgrading local wireline networks.
I’m interpreting this to mean FiOS. Information on subscriber penetration has been light, other than an article done by thestreet.com. My informal survey (i.e. walking around neighborhood where I live and looking at the houses with new fiber aerial drops) here in Boston would indicate about 5-10% penetration after about 6 months of availability.
A total of $3.2 billion has been spent on FiOS over the last two years- a drop in the bucket compared with all of their other expenditures. There must be more to this story than FiOS.
Updated: 22 December 2005 8:45AM w/ quote from morning WSJ Article ($$$)
Verizon’s fiber deployment, which is estimated to cost as much as $20 billion, “while technologically robust, will require significant upfront cost, weakening Verizon’s financial metrics over the intermediate term in exchange for highly uncertain returns,” according to a news release from Moody’s.
Moody’s action, which also cited increased competition from cable operators, could make it harder for Verizon to continue its fiber strategy. It also could force Verizon to shed low- or no-growth assets such as landlines in rural areas to collect cash to reduce debt.