Standard & Poor’s said Thurs. it wasn’t revising credit rating or...

28 p1). S&P said it was keeping credit rating and outlook status for company “because of the uncertainty regarding Verizon’s ultimate obligation to pay the total $8.7 billion it bid in the auction.” FCC order returned $2.8 billion of deposits from re-auction but concluded that bidders should continue to be held to nearly $16 billion in bid obligations, pending outcome of Supreme Court review of D.C. Circuit’s decision that reversed FCC decision to cancel NextWave licenses for nonpayment. S&P noted FCC had said bidders were responsible for full amount of re-auction commitments if Commission prevailed at high court in NextWave case. “However, given the decline in wireless asset values since the auction, full payment of the licenses will continue to be discussed with the FCC,” S&P said. Commission turned down Verizon request to be relieved of overall $8.8 billion payment commitment in connection with re-auction. Legg Mason said in research note to investors that decision left wireless carriers “with considerable financial overhang” on licenses caught up in NextWave litigation: “We thus continue to believe that in the absence of a settlement, the FCC will come under increasing pressure to provide carriers with relief, but the Commission’s unanimous March 27 order suggests it will not do so while the Supreme Court reviews the agency’s appeal of a lower court ruling siding with NextWave.” Report said if FCC prevailed in Supreme Court and carriers defaulted on their obligations, re-auction winners could face penalties of more than 3% of their bids. “It’s our understanding that if the FCC were to subsequently re-auction the licenses and receive smaller winning bids, the carriers from the 2001 auction could be required to make up the difference,” Legg Mason said. It said Commission was likely to continue to face pressure and potential legal attacks to provide carriers with relief on their overall auction commitments. Otherwise, billions of dollars in commitments could linger for years as litigation played out and “complicate the industry’s ability to formulate business plans, strike deals, improve systems,” Legg Mason said. Verizon Wireless lauded return of 85% of deposit but said: “We have made no secret of our position that Auction 35 is void.” With Commission having spelled out its opinion on Verizon’s request to be released from its auction contract commitments, “we will look at options to resolve this difference of opinion,” carrier said. “Even after the refund, the Commission will hold $260 million of our deposit money, and we've lost at least another $115 million in unpaid interest on our deposit,” spokesman said. “In addition, the FCC says we remain on the hook for $8.7 billion for licenses they haven’t delivered and can’t deliver. We need the slate wiped clean and get on with competing in our business.”