As the credit crisis deepens and the rescue of the financial sector stalls in Congress, major U.S. carriers are beginning to worry about the effects of a prolonged freeze on credit to their businesses, most notably AT&T.
AT&T Chairman and CEO Randall Stephenson said the company was unable to sell commercial paper--a short-term IOU--for more than any period longer than overnight, and said a shortage of buyers means borrowing in much tighter than it had been even a few weeks ago. The main aim of the financial bailout bill working its way through Congress--the U.S. Senate was expected to vote on a bill tonight--is for the Treasury to buy up bad assets on the balance sheets of financial institutions so that credit can flow more freely. Stephenson said that is not happening.
"It's loosened up a bit, but it's day-to-day right now," Stephenson said. "I mean literally it's day-to-day in terms of what our access to the capital markets looks like."
He said that the atmosphere in credit markets will lead AT&T to remain extremely cautious in terms of investment and growth.
Other telecommunications companies, including Verizon Communications, have joined major blue chip companies like GE in lobbying drives in Congress to get the bailout bill passed. The bill did not pass in the House of Representatives on Monday, by a vote of 228 to 205.
For more:
-see this AP article on AT&T
-and this article on lobbying efforts (sub. req.)
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