OREANDA-NEWS. Fitch Ratings has affirmed the 'BBB' Issuer Default Rating (IDR) for Time Warner Cable, Inc. (TWC) and its indirect wholly owned subsidiary Time Warner Cable Enterprises LLC. Fitch has also affirmed the short-term ratings and individual issue ratings of TWC and its subsidiaries as summarized below.

Fitch has removed TWC's ratings from Rating Watch Positive and assigned a Stable Rating Outlook to all of TWC's ratings.

Approximately \$23.7 billion of debt, including \$507 million of commercial paper is affected by today's rating action.

Fitch's action follows the termination of TWC's merger agreement with Comcast Corporation following intensifying regulatory concerns from the Federal Communications Commission and the Department of Justice.

The Stable Outlook incorporates Fitch's expectations that TWC's operating profile will continue to strengthen during the rating horizon and the company's credit profile and financial policy will reflect the current 'BBB' IDR during a business as usual scenario. However, Fitch acknowledges that event risks attributable to TWC's credit profile related to potential merger and acquisition activity will remain high for the foreseeable future. Potential M&A activity, regardless of TWC role in the transaction (acquirer or target) will likely result in a much weaker credit profile and pressure TWC's ratings.

KEY RATING DRIVERS
--Fitch's ratings for TWC continue to be underpinned by the company's strong competitive position as the second largest cable multiple systems operator (fourth largest multi-channel video program distributor) in the United States and strong subscriber clustering profile. In addition, the ratings continue to recognize the growing importance of TWC's Business Service segment to the company's overall revenue and cash flow growth prospects.
--Fitch anticipates that TWC will maintain a relatively conservative financial policy and manage its balance sheet to a long term net-leverage target of 3.25x in the absence of M&A activity.
--Fitch expects that TWC's capital allocation strategy will center on share repurchases and that the company will likely reinstate its share repurchase program.
--TWC's strategic initiatives, including reinvigorating its residential business through the launch of TWC Maxx will continue to strengthen its operating profile.

During the course of 2014 TWC generated approximately \$1.4 billion of free cash flow (FCF, defined as cash flow from operations less capital expenditures and dividends) reflecting a 22% decline relative to year end 2013 FCF generation. FCF production was pressured by higher capital expenditures as the company invested in its cable plant, deployed new set-top-boxes and modems supporting the company's TWC Maxx initiative.

TWC's liquidity position and overall financial flexibility are strong owing to Fitch's expectation that the company will continue to generate material amounts of FCF. The liquidity position is further supported by cash on hand (which totaled \$707 million as of Dec. 31, 2014) and \$2.9 billion of available borrowing capacity (as of Dec. 31, 2014) from TWC's \$3.5 billion revolver net of outstanding commercial paper and letters of credit. The commitments under TWC's \$3.5 billion revolver will expire during April 2017.

TWC's debt maturity profile is well laddered and within Fitch's FCF expectation for the company. Maturities total approximately \$1 billion during 2015 including outstanding commercial paper, followed by \$2 billion during 2017.

KEY ASSUMPTIONS
Fitch's key assumptions within the rating case include:

--Low single digit residential revenue growth supported by continued positive revenue mix of faster growing high-speed data service revenue growth and price increases;
--Mid-teen revenue growth within TWC's commercial business;
--Stable operating margins amid growing programming and content costs;
--Capital intensity of approximately 18%;
--Scheduled debt maturities are refinanced upon maturity.
--Share repurchase activity during the forecast period is supported by free cash flow generation and the issuance of incremental debt within the context of the company's 3.25x net leverage target.

RATING SENSITIVITIES:

--Upward ratings momentum is unlikely during the current ratings horizon given elevated event risks related to potential merger and acquisition activity. Positive rating action would likely coincide with TWC adopting a more conservative financial policy highlighted with a gross leverage target below 2.75x. Meanwhile TWC will need to demonstrate the sustainability of its operating profile amid ongoing competitive pressures, changing media consumption patterns and evolving technology platforms.

--Negative rating actions are more likely to coincide with discretional actions of TWC's management including, but not limited to, the company adopting a more aggressive financial strategy or event-driven merger and acquisition activity, that drives leverage beyond 3.75x in the absence of a credible de-leveraging plan.

Fitch has affirmed the following ratings with a Stable Outlook:

Time Warner Cable, Inc.
--IDR at'BBB';
--Senior Unsecured debt at 'BBB'.
--Short-term IDR at 'F2';
--Commercial paper at 'F2'.

Time Warner Cable Enterprises LLC
--IDR at 'BBB';
--Senior Unsecured debt of 'BBB'.