OREANDA-NEWS. On 19 March 2008 Rostelecom, Russia’s national long-distance telecommunications operator, announced that Standard & Poor’s (S&P) has revised its outlook on Rostelecom to “positive” from “stable”. At the same time, the Company’s “BB-” long-term credit rating was affirmed.

Standard & Poor’s commented in its report that the outlook revision reflects Rostelecom’s increasing financial flexibility, providing an opportunity for the Company to strengthen its overall business profile.

According to S&P, Rostelecom’s current financial risk profile features minimal debt, ample liquidity, continuing production of positive free operating cash flow and limited capital expenditures, and will be further supported by the additional cash Rostelecom will receive from the sale of its 11% stake in Golden Telecom Inc.

In its report, S&P also noted that Rostelecom's active expansion into non-regulated telecom market segments, intended to mitigate the decrease in revenues from traditional long-distance services in the competitive environment, could strengthen the Company's market position.

Additional factors underpinning the outlook revision, according to S&P, include the Company’s increasing focus on efficiency and cost control.

The positive outlook reflects the possibility that S&P could raise the Company’s rating if Rostelecom continues to strengthen its business risk profile. This would require the Company to maintain its leading position in the long-distance market, increase revenue diversification and continue improving profitability. Rostelecom must also sustain limited debt leverage and sound credit protection in order to warrant a corporate credit rating upgrade.