OREANDA-NEWS  On 06 March was announced, that Southern Telecommunications Company (“UTK”) [(RTS: KUBN, KUBNP; МICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA)], the principal fixed-line telecommunications provider for Russia’s Southern Federal District reports that Standard & Poors Ratings Services placed its B long-term corporate credit rating on Southern Telecommunications Company on Credit Watch with negative implications. At the same time Standard & Poors affirmed its ruА- rating on the Company according to national scale.

According to Standard & Poors analysts, the Credit Watch placement indicates that they could lower the rating by one or more notches if the Company is unable to refinance some or all of its significant upcoming debt maturities. The key mitigator to Southern Telecommunications Companys weak liquidity is the implied support of state-owned banks, which S&P assumes will continue as long as the Company remains majority owned by state-owned holding company Svyazinvest.

Standard & Poors is likely to resolve the Credit Watch within the next three months.

UTK’s CEO Alexander Andreev commented that placement of the Company’s credit rating on Credit Watch with negative implications was an expected event. Taking into account the upcoming peak debt repayments in 2009, UTK’s management focused on increase of its financial activity effectiveness as long ago as the beginning of 2008.

The Company’s 2009 budget and the Development Program till 2013, approved by UTK’s Board of Directors in December 2008, included crisis-proof measures and actions aimed at accumulation of the Company’s cash flows to repay its financial obligations from internal funds to the maximum. The Company expects to accumulate more than 2 bln roubles before its first peak debt maturities in June 2009.

At present the management of Southern Telecommunications Company together with Svyazinvest negotiates with credit organizations the arrangement of credit facilities to meet its refinancing needs. In particular, in 2009 the Company plans the placement of stock-exchange bonds to the amount of 5 bln roubles. Svyazbank will act as the arranger of the bond placement. And today the Company opens an auction to select a site where its stock-exchange bonds will be placed.

All the effected and ongoing measures on refinancing of the current debt and improvement of the financial and credit policy will allow the Company to cope with peak debt payments and to maintain its strategic financial stability while supporting effective current financing of its operating activities.