S&P and Moody's downgraded AT&T Inc. after the wireless carrier bid $18.2 billion for additional airwaves.
The company's bid was part of a government auction that sells access to additional airwaves, or spectrum, that can expand companies' mobile data capacity and ease congested networks. AT&T said that it plans to start using the new spectrum in 2017 or 2018 to improve performance and offer additional capacity for mobile data, particularly for video.
The rating agencies are concerned about AT&T taking on more debt to pay for the purchase.
Standard & Poor's Ratings Services lowered AT&T's corporate credit rating one step, to "BBB+" from "A-," saying the increased spectrum is good for AT&T's wireless business but it expected the company to pay less, $15 billion to $16 billion.
Moody's Investors Service downgraded the senior unsecured rating one notch to "Baa1" from "A3." It has assigned a negative outlook to the company, citing slowing growth of its wireless business and tough competition.
Even with the downgrades, AT&T's ratings remain investment-grade.
Fitch Ratings said it would look at the spending on airwaves as part of its review of AT&T's rating. The company is on its negative rating watch list, which means it could downgrade the company's rating in the near future.
A representative for Dallas-based AT&T did not respond to a request for comment.