OREANDA-NEWS. On 16 March 2009 was announced, that international rating agency Standard & Poor’s has reaffirmed its long-term credit rating for CenterTelecom at B+ with a stable outlook.

As analysts at the rating agency note, CenterTelecom’s rating is supported by its position as an incumbent operator which has an extensive network in the Central region of the European part of Russia and last-mile access to 6.7 mln customers. Analysts also note that CenterTelecom’s efficiency in optimizing activity and raising profit margins points to an increase in EBITDA margin up to 38% in 2008.  In their opinion, the company’s positive profit trends are driven by the company’s significant success in its efforts to reduce staff numbers, strengthen cost control and gradually raise the number of high value-added services available.  In addition, as analysts note, growth potential for revenue and EBITDA is constrained by limited tariff hikes for base telephone services and higher operating expenses.

“The main factor which constrains the rating level of CenterTelecom remains its weak liquidity.   The remaining funds and confirmed credit lines are insufficient to cover the company’s short-term obligations.   In addition, we are currently upbeat about the company’s liquidity management, since CenterTelecom is in negotiations with several banks about refinancing the largest amount of debt obligations which falls due in August 2009.  We also expect the company to generate a positive free operating cash flow in 2009 and 2010”, Standard & Poor’s analysts believe.

The operator’s stable outlook reflects analysts’ expectations that the company will maintain its positive operating performance metrics, will continue to diversify its revenue base and raise its profit margins, and actively manage liquidity without creating any short-term liquidity risks.