OREANDA-NEWS. On 11 March 2009 was announced, that Standard & Poor's Ratings Services affirmed “B+” long-term corporate credit rating and “ruA+” Russia national scale rating on CenterTelecom OJSC. The outlook is stable.

As the credit analysts point out the ratings are supported by CenterTelecom’s incumbent position, its vast network in European Russia's central region, and its ownership of last-mile Internet access to 6.7 million customers.

The analysts also note that CenterTelecom's effectiveness in optimizing its operations and improving profitability is highlighted by the increase in its EBITDA margin to 38% in 2008. According to the experts’ opinion this rise in profitability stems from substantial progress in headcount reduction, tighter spending controls, and gradual expansion of value-added services. However they observe, that revenue and EBITDA growth potential is limited, owing to limited tariff increases for basic telephony services and rising operational costs.

“CenterTelecom's weak liquidity position remains the key rating constraint. Its existing cash balances and committed credit facilities do not fully cover its short-term debt. Nevertheless, we consider the company's proactive liquidity management to be positive because it is negotiating with multiple banks to refinance its largest maturity, scheduled for August 2009. We also expect to see positive free operating cash flow in 2009 and 2010.” – the analysts of Standard & Poor's say.

The stable outlook reflects the experts’ opinion that CenterTelecom will sustain its positive operating performance, continue to diversify its revenue base, and enhance its profitability; and also the company will continue to manage liquidity proactively, avoiding risks to its near-term liquidity position.