Comcast Earns Junk Rating

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Predicting that Comcast Corp. will hit a lot of hurdles when it digests AT&T Broadband, Moody's Investors Service has downgraded the MSO's senior unsecured debt rating to junk-level status.

"The rating action is based on Moody's view that Comcast faces a significant challenge in integrating a cable MSO that is more than one-and-one-half times its own size, has been experiencing significant subscriber erosion, has the lowest margins in the industry and requires significant network upgrades," Moody's wrote in a stinging review of AT&T Broadband's condition.

The ratings firm predicted that it will take two to three years for Comcast to improve the poor margins on AT&T Broadband systems, which it attributed to "inadequate product and customer-service focus, failing subscriber-retention strategies and bloated cost structure."

Moody's expects Comcast to spend $2 billion to complete the rebuild of AT&T Broadband systems.

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