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The deal will allow Telecom Italia to use TIM's healthy cashflow to service its debts and improve its credit rating, although it will have to borrow to finance the deal, temporarily increasing its debt burden.Meanwhile, Sprint announced a $3 billion investment in its mobile-phone networks.
By paying for Equant with shares, France Telecom avoided increasing its debt.
The Fed still has the option, if conditions warrant, of increasing its debt purchases.
Argentina has argued that violating this clause would risk a flood of bondholder claims and could leave officials vulnerable to criminal prosecution for increasing its debt.
By contrast, return on capital -- a measure preferred by many money managers -- reflects current leverage but won't show whether a company has been increasing its debt burden, Mr. Thorndike said.
But, in recent weeks, more of the proceeds have gone to pay dividends to private equity owners, a move that can weaken a company by increasing its debt load without strengthening its underlying business.
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DANIEL J. ARBESS Manhattan, Jan . 13* To the Editor: The debt-ceiling issue is not about the government stopping paying its existing bills and defaulting on its existing debts — it is about whether the government will continue on its current path of increasing its debts through spending more than the taxes it receives.
At the moment, investors are assuming that they are being used mostly for the latter purpose.In November 2000, Enron restated its financial statements, reducing its profits by $591m over four years and increasing its debts by $628m.
And although the deficit - the annual rate at which the government is increasing its debts - has fallen around five percentage points from the peak of 2009, the deficit remains bigger than that of all other rich developed nations.
It thereby quadrupled generating capacity, but it also increased its debt burden enough so that in December 2001 Moody's downgraded Mirant to junk status.
It would also reduce the amount of additional debt Pearson would have to take on, and the company acknowledged yesterday that it was not eager to increase its debt load.
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