Moody's boosts MegaFon notes to B1, view to positive

Moody's Investors Service said it changed the outlook on the ratings of OJSC MegaFon to positive from stable, including the B1 corporate family rating.

Concurrently, the rating agency said it has upgraded the rating on the $375 million loan participation notes issued by MegaFon to B1 from B2.

Moody's noted the change in outlook to positive reflects MegaFon's robust operational and financial performance fuelled by subscriber growth in Russia and the company's retention of its nationwide market share, continued positive momentum in its revenue and EBITDA growth driven by regional expansion and by increasing economies of scale allowing the company to benefit from its operating leverage.

At the same time, the B1 corporate family rating continues to reflect the highly competitive nature of the mobile market in Russia with the penetration levels reaching approximately 86% by the end of 2005 and the material capital expenditure program resulting in negative free cash flow, the agency added.

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