S&P: Southern Telecommunications on positive watch

Standard & Poor's said it placed its B- long-term corporate credit and ruBBB Russia national-scale ratings on Southern Telecommunications Co. (OJSC) on CreditWatch with positive implications.

The CreditWatch placement reflects potential improvement in Southern Telecommunications's creditworthiness given the company's progress in gradually addressing its liquidity risk, strengthening financial position and maintenance of a positive performance trend, the agency added.

According to S&P, the ratings are primarily supported by the company's dominant market position in key telephony segments in its franchise area and the continuing favorable dynamics in Russia's telecoms industry, with improving regulation.

Offsetting these strengths are the company's aggressive financial risk profile, with a sizable debt burden and constrained financial flexibility, limited revenue diversification and the uncertainty of further regulatory and industry reform, the agency said.

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