Fitch: Outlook stable for Russian/CIS telecoms

Fitch Ratings said ratings for Russian/Commonwealth of Independent States telecom companies are likely to be stable in 2009, underpinned by improvements in free cash flow and deleveraging efforts.

However, the agency said telecoms operators are certainly not immune to the worsening economic climate refinancing, and currency risks may put pressure on the creditworthiness of some operators as liquidity continues to tighten and the risk of a ruble devaluation remains.

Although telecom revenues and costs are predominantly in local currency, Fitch noted that a significant share of capex is in foreign currency. For telecom companies that have preferred to raise foreign currency-denominated debt - due to the scarcity of long-term, inexpensive ruble financing, among others - a ruble devaluation may inflate their leverage and significantly impair their financial flexibility, the agency said.

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