S&P rates VolgaTelecom bonds ruA+

Standard & Poor's said it assigned its ruA+ Russia national scale rating to two senior unsecured bond issues by VolgaTelecom OJSC (B+/stable).

The company is issuing a series II set of bonds for Russian ruble 3 billion and a series III set of bonds for Russian ruble 2.3 billion.

Proceeds from the bond issues will be used to finance VolgaTelecom's upcoming capital investments in network upgrades, expansion of value-added services and to refinance near-term debt maturities.

The ratings on VolgaTelecom are constrained by the continuing restructuring of the Russian telecoms industry and regulatory environment, by the company's limited liquidity and need for continuing efforts at improving its network and operating efficiency and by increasing low fixed-line telephony penetration in the franchise area, the agency said.

Somewhat compensating for these weaknesses, however, are the company's improving business profile, marked by dominant market shares in key telecoms segments; noticeable progress in network expansion and modernization; positive trends in regulated tariffs and social benefits monetization and improving diversification from growth in mobile, internet and other services, the agency said.

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