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Investing.com -- Moody’s Ratings has affirmed AT&T Inc.’s Baa2 senior unsecured ratings following the company’s agreement to acquire spectrum from EchoStar Corporation for approximately $23 billion, maintaining a stable outlook.
The telecommunications giant plans to purchase about 30 MHz of nationwide 3.45 GHz mid-band spectrum and approximately 20 MHz of nationwide 600 MHz low-band spectrum from EchoStar, with the transaction expected to close in mid-2026 pending regulatory approvals.
Moody’s decision to maintain AT&T’s ratings reflects expectations that the company will reduce its debt leverage to 3.5x or less within two years after the deal closes, supported by revenue growth and operating efficiencies from the acquisition.
AT&T views the spectrum purchase as an opportunity to advance its convergence strategy while maintaining its $20 billion capital return objective through year-end 2027. The company plans to keep a consistent approach to capital returns during 2028-2029 while reducing its net debt leverage ratio to 2.5x on a sustained basis.
As part of the agreement, AT&T and EchoStar will enhance their existing wholesale network services arrangement, allowing EchoStar to continue operating under its Boost Mobile brand as a newly defined "hybrid mobile network operator."
Moody’s noted that AT&T benefits from a strong competitive position, scale, and broadband revenue diversity. The company’s debt/EBITDA ratio was 3.3x for the 12 months ended June 30, 2025, and is expected to rise to approximately 3.7x when the EchoStar transaction closes.
The rating agency indicated that AT&T’s ratings could be upgraded if debt/EBITDA is sustained below 3.0x and free cash flow to debt remains above 5%, while a downgrade could occur if debt/EBITDA exceeds 3.5x for an extended period.
AT&T held about $10.5 billion in cash as of June 30, 2025, with access to an undrawn $12 billion revolving credit facility due November 2029.
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