S&P revises MTS Outlook To Pos; 'BB' Affirmed
MOSCOW. Aug 2 (Interfax) - Standard & Poor's Ratings Services said in a statement on Monday that it had revised its outlook for Mobile TeleSystems (MTS).
The statement said: "Mobile TeleSystems (OJSC) (MTS) to positive from stable. At the same time, we affirmed the 'BB' long-term corporate credit rating on MTS."
"The outlook revision reflects our expectation that MTS' financial metrics will remain solid over the medium term, despite the company's acquisition of Comstar United TeleSystems (JSC) (Comstar; BB/Positive/--) and a continuously high level of investments," Standard & Poor's credit analyst Alexander Griaznov was quoted as saying. "MTS' robust operating performance and proactive debt portfolio management also support the outlook revision, in our opinion," he said.
The statement said: "MTS recently decided to increase its stake in Comstar by means of a merger, which we believe will not lead to meaningful cash outflow and will not require additional debt financing. Consequently, MTS' ratio of debt to EBITDA, which was 1.7x for the 12 months ended March 31, 2010, is unlikely to increase to more than 2x over the next 12 months. Moreover, we believe that MTS has the potential to deleverage in the longer term, given that its operating performance remains robust and its market positions strong."
"The outlook is positive because it reflects our view that an upgrade is possible in the next 12 to 18 months if MTS achieves a ratio of adjusted debt to EBTIDA consistently below 2x and moderates its investment appetite and/or shareholder distributions, thereby giving the company greater financial flexibility," said Griaznov, adding: "To be commensurate with a higher rating, we would also expect that MTS could maintain adequate liquidity on a continuous basis, and that its liquidity position would not weaken because of the merger with Comstar."