S&P affirms Polkomtel

Standard & Poor's said it affirmed the BBB+ long-term and A-2 short-term corporate credit ratings on Polkomtel SA, along with the BBB+ issue rating on Polkomtel Finance AB's euro medium-term note program and removed ratings from CreditWatch, where they were placed with negative implications on July 20.

The outlook is stable.

"The CreditWatch resolution follows the successful completion of Polkomtel's PLN 1 billion bond issue that has helped to bolster liquidity," S&P analyst Michael O'Brien said in a statement.

"We believe this issue is especially important in light of the fact that the company's PLN 1.6 billion revolving credit facility will no longer be available after July 2011. We note that the bulk of Polkomtel's substantial ongoing free cash flow generation is allocated generally to dividend payments, potentially leaving less flexibility for

strategic actions or other unforeseen outgoings."

Ratings reflect the company's modest leverage, intermediate financial risk profile and solid operating cash flow generation, the agency said.

Ratings are also supported by Polkomtel's large revenue and subscriber market share in the Polish mobile telecoms market, the agency noted.

Ratings are constrained by the increasingly competitive nature of the Polish mobile telecoms market and by ongoing regulatory pressures, S&P said.

With the current financial policy in place, it is unlikely that leverage will exceed 2x adjusted debt to EBITDA, the agency said.

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