S&P: Mobile TeleSystems still on watch, bonds rated BB-

Standard & Poor's said it kept its BB- long-term corporate credit rating on Mobile TeleSystems on negative following the company's announcement of a planned new eurobond issuance.

In addition, S&P assigned its BB- long-term rating to the company's proposed senior unsecured bond issue. Simultaneously, the rating on the proposed issue has been placed on CreditWatch negative.

The ratings were originally placed on CreditWatch on Dec. 17 following Deutsche Telekom AG's (BBB+/positive/A-2) announced sale of its interest in Mobile TeleSystems.

S&P said the rating continues to be constrained by the company's exposure to a lower-rated parent, relatively aggressive financial policy and continuing focus on business growth, increasing competition in the Russian wireless industry and predisposition to future acquisitions.

These risks are moderated by Mobile TeleSystems' leading market position in the rapidly growing Russian and Ukrainian wireless markets, attractive operational profitability, robust and improving cash flow generation and moderate exposure to financial leverage.

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