Credit agencies have given BT's proposed wireless spin-off O the thumbs down, giving the firm a debt rating barely above junk status.
Standard & Poor's (S&P) rates O holding firm mmO at BBB-, its lowest ranking above junk, while Moody's rates it two notches above junk at Baa2. By comparison, S&P rates BT at A-.
S&P said that mmO's low level of debt, just £500m, was improving its performance in the UK, but that it was weak in Germany and The Netherlands and would have to spend heavily building third-generation (3G) networks.
O confirmed on Tuesday that it has sealed a £3.5bn loan, due in 2006, to help build 3G networks in the UK, Eire, The Netherlands and Germany.
Analysts say the ratings are not unexpected and reflect the high-risk nature of the mobile sector as it moves into 3G.
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