Fitch affirms Kazakhtelecom

Fitch Ratings said it affirmed Kazakhtelecom JSC's long-term foreign- and local-currency issuer default ratings at BB, short-term foreign-currency issuer default rating at B and national long-term rating at A(kaz).

The outlook on the long-term ratings is stable.

The affirmation reflects the expectation that the company's gross leverage will most likely substantially increase in the medium-term as the result of the high level of planned capital expenditure and the intention to finance up to 50% of investment projects with new borrowings, while foreign currency and liquidity risks will remain substantial, according to the agency.

Fitch said expects total debt-to-EBITDA leverage to rise to closer to 2.0x during the next few years from 1.37x at the end of the first half, driven by high capital expenditures.

The affirmation also reflects the high foreign-currency risks with the majority of debt denominated linked to foreign currency and liquidity risks with cash stored in local banks which have a substantially lower rating than Kazakhtelecom, the agency noted.

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