Reuters

S&P revises Primus Telecommunications outlook

(The following statement was released by the ratings agency)

"The outlook revision reflects the company's success in maintaining and increasing its customer base, as well as associated revenues and EBITDA, in a very challenging economic and competitive climate."

NEW YORK, July 1 - Standard & Poor's Ratings Services said today that it has revised the outlook on McLean, Va.-based international long-distance telecommunications provider Primus Telecommunications Group Inc. (OTCBB:PRTL - News) to stable from negative.

The outlook revision reflects the company's success in maintaining and increasing its customer base, as well as associated revenues and EBITDA, in a very challenging economic and competitive climate.

In the first quarter of 2003, Primus' revenues grew 23% from the prior year. EBITDA for the first quarter grew substantially as well and totaled $33 million for the first quarter of 2003, versus $21 million for the prior year. More importantly, the company has significantly lowered its total debt in the past few years through open market debt repurchases, vendor settlements, as well as conversions of convertible subordinated debt.

As a result of these activities, debt declined to $562 million at March 31, 2003, from $668 million at Dec. 31, 2001, and $1.256 billion at Dec. 31, 2000. The resultant debt to annualized EBITDA for the first quarter of 2003 totaled a fairly moderate 4.3x. Yet, despite these improvements and the fairly limited level of debt to EBITDA, the company still has a very weak credit profile. International long distance is highly competitive and long-term business risks are uncertain.

"Standard & Poor's had been concerned about the company's liquidity in light of the relatively high concentration of its business with financially distressed telecommunications carriers," said Standard & Poor's credit analyst Catherine Cosentino. "In recent periods, nevertheless, Primus has been able to reduce its dependence on the carrier sector, which now makes up about 20% of its revenues, down from 24% in the first quarter of 2002. This has been accomplished through ongoing growth in the residential long-distance base, as well as tightened credit policies for carrier customers."

Primus has also been able to secure additional funding for its operating and capital needs.

The ratings continue to reflect the high business risk of the international long distance telecommunications industry. This business is characterized by substantial competition and attendant pricing pressures and churn, particularly for the consumer sector.

Primus is a global facilities-based telecommunications carrier offering bundled voice, data, Internet, digital subscriber line (DSL), Web hosting, enhanced application, virtual private network (VPN), and other value-added services. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Credit Ratings Actions.

Reprinted from Yahoo Finance.

For more information on Primus, view the latest press releases.