OREANDA-NEWS. On 15 February 2008 was announced, that Fitch Ratings assigned OJSC VolgaTelecom long-term Issuer Default Rating (IDR) of “BB-”; national long-term rating of “A+(rus)” and short-term IDR of “B”. The outlooks on the long-term IDR and national long-term ratings are “Stable”. The agency also assigned national rating of “A+(rus)” to three VolgaTelecom’s outstanding domestic bonds, structured as senior unsecured obligations, as follows:
- Series 2, RUR 3 billion;
- Series 3, RUR 2.3 billion;
- Series 4, RUR 3 billion.

VolgaTelecom’s ratings are the highest of Mega Regional Companies of Svyazinvest.
“VolgaTelecom has consistently been the most profitable and one of the least leveraged Russian incumbent operators. Positive short-to-mid term growth outlook for higher-margin mobile and broadband segments, and management’s focus on cost-cutting is to help maintain margins and ensure overall growth rates in the high single-digit territory” – says Nikolai Lukashevich, Senior Director with Fitch’s TMT team.

Short- and long-term Issuer Default Ratings (IDRs) may be assigned to entities for certain sectors, which reflect the ability of an entity to meet financial commitments on a timely basis. In this case, the ratings take into account VolgaTelecom’s position of an established fixed-line incumbent telecoms company in its operating territory.

Fitch sees the regulatory environment in Russia as generally pro-incumbent which protects VolgaTelecom against competition with alternative operators in the traditional fixed-line segment. Fitch also states that “although VolgaTelecom is only a niche mobile operator, the segment’s margins are strong and the business is run as a cash cow with a positive contribution to overall margins and cash flows”.