OREANDA-NEWS. March 12, 2010. Fitch Ratings has raised OJSC VolgaTelecom’s Long-term Issuer Default Rating from “BB-“ to “BB”, National Long-term rating from “A+(rus)” to “AA-(rus)”. The outlooks for the Long-term IDR and National Long-term Rating are “Stable”. Short-term IDR has been affirmed at “B”.

As the agency’s report states “the ratings reflect substantial improvement of liquidity and mitigated risks of refinancing of the incumbent operator, and also the fact that VolgaTelecom’s operating and financial performance remains strong and leverage is low.” Fitch also notes that the advantage factor for the operator is more uniform financial and operating strategy in Svyazinvest group. There is significant potential of increase in synergy if the reorganization suggested by Svyazinvest is successful; this reorganization provides for business combination of all the subsidiaries.

The report also states that “operating and financial performance of incumbent operators, VolgaTelecom including, demonstrated high stability in the downturn. The companies’ revenue grew, margin indicators improved and the subscribers’ base and the use of telecommunications services upon the whole remained stable. Most of the operators have demonstrated impressive flexibility in severe curtail of Capex, which enabled them to improve sufficiently free cash flow generation and ensure cash for debt servicing. Upon the whole Fitch expects that strong control over expenses remains which will support margin.”