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Russia's VolgaTelecom (OJSC) Long-Term Rating Raised To 'BB' On Reduced Liquidity Risk; Off Watch; Outlook Stable

November 30, 2010 Standard & Poor's
MOSCOW (Standard & Poor's) Nov. 30, 2010--Standard & Poor's Ratings Services said today that it raised its long-term corporate credit rating on Russian telecommunications operator VolgaTelecom (OJSC) to 'BB' from 'BB-'. We also raised our Russia national scale rating to 'ruAA' from 'ruAA-'. At the same time, the ratings were removed from CreditWatch, where they were placed with developing implications on June 21, 2010. The outlook is stable.

"The rating action reflects our assessment of VolgaTelecom's strengthened financial profile and, specifically, its "adequate" liquidity position," said Standard & Poor's credit analyst Alexander Griaznov.

A risk of early repayment claims from creditors, which we previously indicated as a possible near-term risk, has been eliminated because the window for such claims is now closed. On June 21, 2010, the company's annual shareholder meeting approved VolgaTelecom's reorganization for merger into Rostelecom. In compliance with Russian legislation, all of VolgaTelecom's debtholders had the legal right to claim from the company early repayment of their debt in court. We will withdraw the ratings on VolgaTelecom when the reorganization, in the form of the merger with Rostelecom, is finalized. On completion of the transaction, VolgaTelecom will cease to exist as a separate legal entity.

"The stable outlook reflects our view that VolgaTelecom will continue its strong operating performance, generate positive free cash flow, and maintain an adequate liquidity position," said Mr. Griaznov.

Company — Rostelecom - Volga
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    Rostelecom – Volga
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