Moody's upgrades Golden Telecom to Ba3

Moody's Investors Service said it upgraded the corporate family rating of Golden Telecom Inc. to Ba3 from B2.

The outlook is stable.

The agency said the upgrade reflects the company's strong operational and financial performance track record, the improved visibility of the company's publicly communicated business strategy over the medium term combined with clearly communicated financial policy and leverage parameters and the growth momentum in the Russian telecommunication sector underpinned by the continued macroeconomic improvements and ongoing regulatory developments.

At the same time, Moody's said the rating recognizes Golden Telecom's position as an alternative operator with a focus on the corporate sector in Moscow and St. Petersburg and the heavy investments the company plans to make in 2006 and 2007 to develop its services for the small and medium enterprise and residential sectors in the Russian regions, thus creating a free cash flow deficit.

The rating also assumes that the company will adhere to its stated maximum total-debt-to-EBITDA ratio of 1.8x.

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