13 May 2004 02:20
NWTelecom outlook revised to positive
MOSCOW. May 12 (Interfax) - Standard & Poor's Ratings Services has revised its outlook on North-West Telecom
(NWTelecom) to positive from stable and affirmed its 'B-' long-term corporate credit rating on the company,
S&P said in a press release Wednesday.
The move follows 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, Standard & Poor's 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 Standard & Poor's 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.
The credit quality of NWTelecom could improve should the company succeed in growing revenues from competitive
segments of the market, while continuing its network modernization program without significantly increasing its leverage
or materially worsening its moderately negative free operating cash flow. The company is expected to improve its
liquidity by resolving uncertainties related to an unsettled debt liability to the Russian government.
[Interfax] |
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