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Moody's downgraded



senior unsecured long-term debt ratings to Baa3 from Baa2 and lowered its ratings on the company's subsidiaries by one notch each.

Moody's attributed its actions to cash flow concerns for the telecom services provider. The ratings agency also said its outlook for Sprint and its divisions is negative.

In a statement, Moody's said it "believes the prospective likelihood of more aggressive wireless competition, the substantial capital expenditures requirements of

Sprint PCS


, and further long distance weakening, particularly in consumer voice, could make it challenging to deliver strong free cash flow over the next two years."

Ratings downgrades make borrowing more costly and can hurt companies in other ways too. The downgrade left at least one analyst questioning the timing of the move. Besides a bank facility that Sprint is negotiating, there is little new about the company.

"I think the bond rating agencies are trying to get ahead of the game," said Rex Mitchell, a Sprint analyst for BB&T Capital Markets. "I see this as reactive. Nothing has changed."

Sprint still has about $16 billion in debt, which hasn't changed since January, and the $5 billion of debt the company issued in March is still expected to carry it through the year.

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Moody's defended the action. "There isn't always a trigger event to our ratings actions," said Robert Konefal, managing director of corporate finance for the ratings agency. "We're just closing our review. There's nothing new today."

Mitchell said both Standard & Poor's and Moody's have taken some heat for waiting until last month to downgrade



debt to junk status, well after investors had already digested that telecom's problems.

Sprint is expected to auction off its directory business perhaps as early as this month in an effort to raise capital. It's been estimated that the sale could fetch up to $2.4 billion.

Sprint closed down 1.4% to $14.94. Elsewhere in the sector,



closed up 15.% to $1.69. Qwest was down 1.2% to $4.94, and


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dropped 3% to $11.40.