OREANDA-NEWS.  On 29 January 2008 Standard & Poor's affirmed its “BB-” long-term corporate credit and “ruAA-” Russia national scale ratings on regional telecoms operator VolgaTelecom (OJSC). The outlook is stable.

The agency’s report states that “The rating continues to be supported by VolgaTelecom's resilient market position in its franchise area, increasing revenue diversification, and superior network quality. The ratings also take into account the positive dynamics in Russia's telecommunications industry, helped by robust GDP growth and an improving regulatory framework”.

The agency’s analysts note the Company’s strengths “VolgaTelecom benefits from moderately improving market positions in its key business segments, including local and intraregional fixed-line telephony and Internet, in which it controls estimated market shares of 81%, 97%, and 60%, respectively. Growing mobile operations contribute about 14% of total revenues and buoy revenue diversification. Given the Company's robust cash flows, VolgaTelecom has the ability to adequately manage its liquidity, with timely refinancing of short-term maturities.” – states the agency’s report.

At the same time the ratings on VolgaTelecom are constrained by several factors, and Standard & Poor's credit analysts note “the Company's reduced financial flexibility, modest free cash flow generation, and intense competition in the mobile segment. The possible risks associated with ongoing industry and regulatory reform, as well as moderate economic characteristics of the service area also constrain the ratings.”

“The stable outlook reflects our expectation that VolgaTelecom will maintain a dominant market position in its key business segments, while focusing on improving efficiency and generating free cash flows.” – states the report.