Press Releases / 27.02.2012

Press Release as of 27.02.2012


CJSC AK&M Rating Agency assigned the ‘A' credit rating with a stable outlook, as per the national scale, to MOBITEL LLC.

CJSC AK&M Rating Agency assigned the ‘A' credit rating with a stable outlook, as per the national scale, to MOBITEL LLC (hereinafter referred to as the Company).

The ‘A' rating indicates that the Company is qualified as a highly reliable borrower. Risk of a delay in meeting liabilities is relatively low, restructuring risk for the loan / part of the loan is minimal.

The company was established 6/29/2010 to consolidate mobile assets of Svyazinvest Holding. In 2011, the Company's authorized capital was increased with the contributions from OJSC Rostelecom and seven interregional companies contributing their own treasury shares for their respective stakes in the Company. After the interregional companies were taken over by OJSC Rostelecom, Rostelecom's share in the Company's authorized capital reached 99.99% while the Company obtained a large block of voting shares of OJSC Rostelecom after the stocks of the interregional companies were converted into that of OJSC Rostelecom. In 2012, the Company's voting stake in OJSC Rostelecom was increased to 6.55%. This block of shares will be used for strategic acquisitions; otherwise, some of the shares may be sold during a secondary public offering (SPO), depending on the future situation in the security market.

A strong argument for the rating score is the powerful owner. The company is a subsidiary company of OJSC Rostelecom. OJSC Rostelecom is the national telecommunication company of Russia with a bunch of state licenses for a wide range of telecommunication services in all regions of the Russian Federation. Through the Federal Agency for State Property Management, OJSC Svyazinvest and Vnesheconombank the state owns 53.2% of OJSC Rostelecom's common shares. The principal shareholder makes considerable efforts to support the Company. In 2011, the Company's authorized capital was increased by over RUB 14 billion. Being able to concentrate and mobilize considerable financial capacities over a short period of time, the shareholder may be expected to provide the necessary assistance to the Company should it come across short-term liquidity problems or losses.

Today, the company features a good performance in the way of profit. For three quarters 2011, its revenue from the sold preferred stock of OJSC Rostelecom totaled RUB 3.5 billion, pre-tax profit amounted to RUB 2.9 billion, net profit reached about RUB 2.8 billion. The debt profile is constituted by both short-term and long-term liabilities. The debt to revenue ratio as of 9/30/2011 was 16%. The debt to asset ratio and debt to equity ratio were about 3% which is good for the company and naturally favorable for its rating score. Financial investments prevail in the asset profile reaching RUB 17.3 billion as of 9/30/2011. The financial investments are represented by the value of securities (shares) and a loan provided to OJSC Rostelecom (RUB 14.2 billion and RUB 3.1 billion, respectively). Financial investments account for 97.63% of the Company's total current assets.

Financial risks, however, are restrictive on the rating score. Having most of the Company's assets represented by financial investments (including the value of its stake in OJSC Rostelecom) makes the market risk the principal financial risk generated by investments in securities. Today, the Company's financial asset revaluation surplus exceeds the related expenses (RUB 4.1 billion against RUB 1.3 billion). However, it market conditions turn negative the surplus-expenses balance may reverse. The interest and liquidity risks as well as the general market price drop risk should also be considered.

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This press release is based on the statement of assigning a credit quality rating to MOBITEL LLC.

The rating score, along with any information and conclusions provided in this press release, only conveys our opinion on the company's reliability and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities.

AK&M Rating Agency will not incur any responsibility for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993.

AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010).

AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Provision 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide business banking services to project and engineering entities implementing investment projects), the MICEX (as a prerequisite for including bonds in the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation base, for listing bonds and for providing access to the MICEX+ trading mode). Pursuant to an order of Russia's Government AK&M Ratings count for approving the capitalization increase procedure for banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.


CJSC Analysis, Consulting and Marketing Rating Agency

ul. Gubkina 3

Moscow, Russia

Press release by: A.V. Yakovenko

Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.