S&P cuts Southern Telecommunications to CCC+

Standard & Poor's said it lowered its long-term corporate credit rating on Southern Telecommunications Co. (OJSC) to CCC+ from B- as a result of the company's significantly increased exposure to financial risk. The outlook is negative.

At the same time, S&P lowered its Russia national scale and senior unsecured debt ratings on the company to ruBB from ruBBB-.

S&P said the ratings reflect Southern Telecommunications' poor liquidity and deteriorating financial profile, marked by aggressive investments and rapid accumulation of debt.

In addition, S&P said the ratings are constrained by the company's exposure to a currently unbalanced tariff structure, its lack of business diversification and the relatively weak economics of its franchise area.

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