AT&T says credit woes cramping operations

The tightening of the global credit markets is cramping the world's largest telco company.

An Associated Press report quoted AT&T chairman and CEO Randall Stephenson said Tuesday that his company was unable to sell any commercial paper last week for terms longer than overnight.

Commercial paper, which helps lubricate the flow of business operations, is a short-term IOU available to corporations that banks usually know are good for the money, the report said.

It's not that short-term borrowing is unreasonably expensive, Stephenson said. A shortage of buyers for the debt means such borrowing is not as readily available as it had been even three weeks ago, he said.

'It's loosened up a bit, but it's day-to-day right now. I mean literally it's day-to-day in terms of what our access to the capital markets looks like,' Stephenson said.

The report quoted AT&T spokesman Larry Solomon saying that the company has ready access to the commercial paper market at reasonable rates and various terms.

But as a result of the recent volatility, managers at the Dallas-based phone company are more cautious.

'Your ability to plan for investment is obviously affected. You kind of don't know what your cost of capital six months from now is going to be,' he said. 'We'll just be very guarded, cautious in terms of where we invest, very guarded and cautious in terms of hiring and capital spending. We'll see where this situation goes.'

AT&T has strong cash flow, which makes it less reliant on debt. But it's also paying for some big acquisitions of wireless spectrum this year.