Fitch affirms Sibirtelecom ratings

Fitch Ratings said it has affirmed Sibirtelecom's senior unsecured foreign currency rating at B+ with a positive outlook. At the same time, the agency has affirmed Sibirtelecom's short-term foreign currency rating at B.

Fitch said the ratings consider the significant growth in Sibirtelecom's revenues and earnings over the last two years, while the positive outlook reflects what Fitch views as upbeat prospects for 2004 and beyond. Fitch estimates that Sibirtelecom leadership in the residential sector will be unrivaled in the mid-term while competition in the business segment may intensify.

The ratings reflect Sibirtelecom's dominant market position in eastern and large part of western Siberia. Both the vast territorial spread and low population density make the company a relatively high cost telecom provider compared to its peers west of the Urals. As its tariffs on key services such as local connections and long-distance telephony are regulated, there is a risk that tariff hikes - which need to be approved by the regulator - may not be sufficient to maintain its margins.

Fitch said the ratings also reflect the dominant influence of the company's majority shareholder, Svyazinvest, on the strategic decision making process at Sibirtelecom.

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