S&P: AFK Sistema on positive watch; Mobile TeleSystems on negative watch

Standard & Poor's said it placed its B long-term corporate credit rating on AFK Sistema, the Russia-based holding company, on CreditWatch with positive implications. In addition, S&P placed its BB- long-term corporate credit rating on Mobile TeleSystems (OJSC), which is a key subsidiary of Sistema, on CreditWatch with negative implications.

S&P said the rating actions reflect the expected sale of almost one-half of Deutsche Telekom AG's (BBB+/positive/A-2) 25.3% stake in Mobile TeleSystems (held through its subsidiary T-Mobile), which should allow Sistema to gradually strengthen its control and have a better access over the cash flow of its key subsidiary. The ratings on MTS have been placed on CreditWatch with negative implications to reflect the expected higher influence from Sistema, a lower-rated entity.

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