OREANDA-NEWS  On 19 December was announced, that Rostelecom (NYSE: ROS; RTS, MICEX: RTKM, RTKMP), Russia’s national telecommunications operator, welcomed the decision by Standard & Poor’s (S&P) to upgrade Rostelecom’s long-term credit rating to "BB" from "BВ-" with a stable outlook.

S&P noted in its report that the change in rating mainly reflects the Company’s improving performance alongside its resilient financial risk profile, marked by minimal debt and ample liquidity.

According to S&P, other factors underpinning the credit rating revision include the Company’s initiatives to control costs and improve profitability, and the active expansion into unregulated telecom market segments to counteract the decrease in revenue from traditional long-distance services given the competitive environment.  The report also cites that the increase of Rostelecom’s stake in RTComm.RU to 99.5% strengthened the Company’s position in the wholesale Internet market. And as a result of the completion of major investment projects, Rostelecom’s network could become a major transit traffic route between Europe and Asia.

The stable outlook reflects Standard & Poor’s expectation that Rostelecom will retain its leading position in the long-distance market while gradually increasing revenue and EBITDA diversification.

S&P underlined that Rostelecom continues to maintain a sound capital structure, which provides additional flexibility to the Company's cash flow, giving it flexibility to make strategic acquisitions without deteriorating credit ratios.

Konstantin Solodukhin, General Director of Rostelecom, said: “During a time when many companies in Russia and abroad are dealing with the impact of the world economic crisis, we highly appreciate the recognition of our efforts to further strengthen the Company’s financial profile. In fact, Rostelecom is the only Russian telecommunications company whose long-term credit rating has been raised since the beginning of the global financial crisis. We are pleased that an international expert like S&P recognizes the Company’s business development efforts, supporting the expectation that Rostelecom can maintain its leadership in the Russian telecom market.”

S&P commented that any further upgrade to the Company’s rating would be contingent on Rostelecom meaningfully improving diversification by organic expansion into unregulated segments or the acquisition of businesses with strong business risk profiles.