Fitch Affirms AT&T's Ratings at 'A'; Assigns Stable Outlook

Fitch Ratings has affirmed the 'A' Issuer Default Ratings and debt security ratings of AT&T (NYSE: T) and its subsidiaries. The ratings have been removed from Rating Watch Negative and a Stable Rating Outlook has been assigned. In addition, Fitch has assigned an 'A' rating to AT&T's new $5 billion, 364-day revolving credit facility. A full rating list is shown below.

Fitch had placed AT&T's ratings on Rating Watch Negative on March 21, 2011 following the company's announcement of a definitive agreement to acquire T-Mobile USA, Inc.'s (T-Mobile USA) assets from Deutsche Telekom AG (DT) in a $39 billion cash and stock transaction. On Dec. 19, 2011, AT&T and DT mutually agreed to terminate the transaction following actions by the Federal Communications Commission and the Department of Justice to block the transaction. AT&T will incur a fourth quarter 2011 charge of $4 billion and pay T-Mobile USA a break up fee consisting of $3 billion in cash and $1 billion book value of spectrum.

In Fitch's view, the current 'A' rating is supported by AT&T's financial flexibility, which will enable it to maintain leverage in a 1.5 times (x) to 1.7x range appropriate for the current rating category. Additional key factors considered in AT&T's ratings include the company's diversified revenue mix, its significant size and economies of scale as the largest telecommunications operator in the U.S., and Fitch's expectation that AT&T will benefit from continued growth in wireless operating cash flows.