Fitch: Sistema outlook stable

Fitch Ratings said it revised Sistema JSFC's outlook to stable from positive and affirmed its long-term foreign- and local-currency issuer default ratings at BB-, its foreign- and local-currency senior ratings at BB- and its national long-term rating and national senior debt rating at A+(rus).

The outlook revision primarily reflects Fitch's assessment that Sistema is unlikely to come up with a quick solution for its subsidiary SSTL (Shyam), a small niche CDMA operator in India. The organic development of this business requires considerable capex and would entail a substantial cash burn before it is turned EBITDA positive, the agency said. Some debt at Shyam is guaranteed by the holding company, and Fitch believes that future funding efforts by Shyam are likely to require shareholder support increasing off-balance sheet liabilities recourse to the holding company.

Sistema's ratings continue to be supported by strong operating and financial performance at its key subsidiaries, Mobile Telesystems OJSC and Bashneft, Fitch said.

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