OREANDA-NEWS. December 28, 2009. According to the agency, the rating is based on the company’s solid position as Moscow market leader in fixed-line telecoms, healthy asset quality, the substantial financial and political resources of a leading shareholder, high profitability, strong corporate governance and stable measures of cash flow.

Potentially destabilising factors include dependence on rates fixed by government regulation and growing competition from alternative (fixed line and mobile) telecoms providers.

About the Company:

OAO Moskovskaya Gorodskaya Telefonnaya Syet [trs. Moscow City Telephone Network OJSC] (MGTS) is one of Europe’s largest fixed-line telephone operators and can trace its history back to 1882. Its principal shareholders are OAO Komstar-OTS (55.73%) and OAO Svyazinvest (23.33%). MGTS provides fixed-line telephone and internet services to private individuals, government bodies and businesses located in the city of Moscow. The Company’s market share exceeds 77% (98% in the case of retail services) and it has more than 4.3 million subscribers, including 3.6 million private individuals. Majority shareholder Komstar-OTS is controlled in turn by AFK Sistema, Russia’s largest public diversified corporation, which under the terms of an agreement with the Moscow authorities is to take over full ownership of MGTS. MGTS shares are traded on the MICEX and RTS exchanges.