CenturyLink is at the center of a multimillion-dollar class-action lawsuit that alleges the service provider signed up customers in Arizona for services they did not actually sign up for, but Moody’s says it won’t have any effect on its pending Level 3 deal and overall ratings.
Plaintiffs in the class-action suit are seeking damages estimated from between $600 to $12 billion.
Moody’s said in a report on the suit filed against CenturyLink that “if the company is guilty of the allegations, any potential settlement amount is likely to be limited and unlikely to impact to the company's ratings.”
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The ratings company added that it’s too “premature to assess the validity of these claims and the extent of the alleged conduct which could potentially result in a large settlement.”
Specifically, Moody’s said that the recent development does not impact CenturyLink's Ba2 corporate family rating ("CFR") and the ratings remain on review for downgrade.
The service provider’s Ba2 CFR is a reflection of its predictable cash flows, broad base of operations and a strong market position, especially in its fiber-enabled major markets.
However, Moody’s pointed out that CenturyLink’s good points are slightly clouded by ongoing challenges in reversing the downward pressure on revenues and EBITDA margins due to competitive forces and the ongoing migration of residential and business customers from TDM to IP-based services.
The class-action suit, which is from a group of customers, was the second lawsuit the telco faced in less than a week.
A former employee also sued the service provider over claims that she was fired for alerting the company about charging customers millions of dollars for services they never ordered.
But CenturyLink’s legal actions may not be relegated to just these two suits alone.
Lundin Law has announced a securities class action lawsuit against CenturyLink and has encouraged investors with losses to get involved. The law firm is looking at possible violations of federal securities laws in the class action period between February 27, 2014 and June 15, 2017.