S&P: NWTelecom positive

Standard & Poor's said it revised its outlook on North-West Telecom to positive from stable and affirmed its B- long-term corporate credit rating on the company, following NWTelecom's adequate performance since it was reestablished through the merger of nine business units in late 2002.

The rating actions also reflect the company's expected sustainable financial policy and liquidity in the medium term.

At the same time, S&P said it raised its long-term Russia national scale corporate credit and senior unsecured debt ratings on NWTelecom to ruBBB+ from ruBBB.

"The rating actions primarily reflect NWTelecom's sound achievements in consolidating the operations of nine business units, which merged in late 2002, and the company's sustainable approach to financing its continuous costly network modernization and expansion program," said S&P credit analyst Pavel Kochanov.

The ratings on NWTelecom remain constrained, however, by stringent tariff regulation of core revenue streams, the company's weaker position in the provision of services to the more lucrative business segment, and the increasing competition in its key market in St. Petersburg. The ratings are also constrained by NWTelecom's limited financial flexibility due to negative free operating cash flow, a high proportion of short-term debt maturities, and exposure to foreign currency risk.

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