S&P: Russian telecoms on upswing

Standard & Poor's said the credit trend for Russian telecommunications companies continues to be positive overall, according to a report titled "Peer Comparison: Russian Regional Fixed-Line Telecommunications Companies."

The agency noted the report compares the business risk and financial risk profiles of five rated Russian fixed-line incumbents: Uralsvyazinform (USI, B+/stable), Volgatelecom (B+/stable), North-West Telecom (NWT, B+/stable), Central Telecommunications Co. (CTC, B-/stable) and Southern Telecommunications Co. (STC, CCC+/stable).

"The potential exists for further rating improvements in the short to medium term. During 2005, the ratings on USI, Volgatelecom, NWT and CTC were raised owing to a combination of improving business characteristics and stabilizing financial risk profiles," said S&P credit analyst Lorenzo Sliusarev.

"Although the rating on STC was lowered due to the company's considerably weakened operating performance, significantly increased leverage and deteriorating liquidity position, the outlook was later revised to stable from negative owing to the prevention of further deterioration of the company's credit profile during the first half of 2005."

S&P added the telecoms industry in Russia continues to undergo substantial restructuring and regulatory reform as the government introduced several key changes in 2005, which, combined with the streamlining of interconnection terms, paved the way for further liberalization of the long-distance market.

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