Press Releases / 19.08.2015

Press Release as of 19.08.2015

T2 RTK Holding LLC

CJSC AK&M Rating Agency has affirmed the national scale credit rating of LLC T2 RTK Holding at 'A+', with a stable outlook.

The 'A+' rating indicates that LLC T2 RTK Holding has a very high degree of creditworthiness. The risk of a failure to meet obligations in time is insignificant. The rating assignment was based on the Credit Rating Methodology for Corporates (Issuers) and Financial Assets rev. January 23, 2014 including the amendments approved by the Methodology Committee on February 18, 2015), taking into account the Company's consolidated financial report prepared under IFRS standards.

LLC T2 RTK Holding is a joint venture established during the consolidation of the mobile assets of OJSC Tele2 Russia Holding AB and PJSC Rostelecom. Following completion of the transaction, the newly created federal-scale mobile telephony provider is operating in more than 60 regions under the Tele2 brand.

In June 2015, the legal restructuring process was completed, with 33 operational companies (including those transferred to the new company during the amalgamation within Rostelecom's mobile assets) merged into T2 Mobile LLC. While LLC T2 RTK Holding persists as the parent company, its wholly-owned subsidiary T2 Mobile LLC is operating the business providing mobile communications services under the Tele2 brand in the regions where the company is present.

The positive rating drivers for LLC T2 RTK Holding include the Company's growing share in the market of telecom services; the higher sales revenue, the increase in assets, the acceptable return on sales, the support from ultimate beneficiaries and the sufficiency of financial resources for the servicing of the current loan debt across the forthcoming 12-month period.

LLC T2 RTK Holding continues cementing its positions in the Russian market of mobile communications services. Over the period from the end of 2013 to the second quarter of 2015, the subscriber base of LLC T2 RTK Holding increased by 11,182 thousand subscribers net. In relative terms, the subscriber base expanded by an impressive 47%. For the same period, T2 RTK Holding's share in the Russian market of telecom services increased from 10% to 15%.

At the end of 2014, the rated Company's operating revenue increased by 33.3% year-on-year to RUB 87.4 billion; in the opening quarter of 2015, the Company further improved its revenue almost by half to RUB 23.1 billion.

By the beginning of the second quarter of 2015, assets of LLC T2 RTK Holding had reached a historic high of RUB 222.5 billion. At the end of Q1 2015, total assets of LLC T2 RTK Holding increased more than 1.6 times against the same period in 2014.

Despite the vigorous expansion and heavy network construction investments, LLC T2 RTK Holding maintains an acceptable return on sales ratio. At the end of the first quarter of 2015, the Company's EBITDA margin stood at 22.7%, operating profit margin was 7.8%.

The shareholding structure of LLC T2 RTK Holding includes publicly-held company Rostelecom and Tele2 Russia Holding AB controlled by JSC VTB Bank and Bank Rossiya. The availability of such powerful shareholders ensures generous administrative backing, together with financial support if necessary, thereby reducing organization-specific risks for LLC T2 RTK Holding, a positive signal for the Company's rating.

Despite the fairly high debt burden, LLC T2 RTK Holding has sufficient financial resources for servicing its current loan debt across the forthcoming 12-month period. Proceeding from the Company's current debt profile, its debt servicing expenses in the forthcoming 12-month period (including both principal repayment and interest / coupon payments) are projected at approximately RUB 36.7 billion. It should be noted that T2 RTK Holding's retained earnings alone amounted to almost RUB 95.4 billion at the start of Q2 2015.

We regard the losses in early 2015, the growing debt and the weak liquidity position as the rating constraints for LLC T2 RTK Holding.

The rated Company posted a net loss of almost RUB 2.3 billion in Q1 2015.

Besides, LLC T2 RTK Holding faces a growing debt burden. In the first quarter of 2015, the Company's loan debt grew by 13.7%, total liabilities increased by 2.1%.

At the same time, the Company's current liquidity ratio went down from 0.33 to 0.28 in the first quarter of 2015 while absolute liquidity ratio decreased from 0.08 to 0.05.


LLC T2 RTK Holding is one of the backbone structural units of Tele2, the fourth biggest Russian mobile telephony services provider in terms of the subscriber base. LLC T2 RTK Holding is a large and fast-paced Russian provider of telecom services.

Full name: Limited liability company «T2 RTK Holding».

Short name: LLC «T2 RTK Holding».

As of April 1, 2015, the Company's assets totaled RUB 222.5 billion, equity capital amounted to RUB 95.4 billion. The Company's auditor is OOO Ernst & Young.


AK&M Rating Agency assigned a credit rating to LLC T2 RTK Holding for the first time on June 30, 2014. The last rating action in relation to the Company was taken on June 30, 2014. All rating action announcements are available on the website.

The rating is valid until mid-August 2016. AK&M Rating Agency may revise the rating and/or the outlook during this period if circumstances fundamentally influencing the Company's creditworthiness are revealed.

For estimation purposes, we completely rely on the reliability of information provided by the Company. The rationale for AK&M Rating Agency's judgment on the rating may include information acquired from other sources we deem to be reliable; however, the agency does not check the input data exhaustively and disclaims all responsibility for their possible errors.

This press release is based on the Statement of assignment of a guarantee institution rating to LLC T2 RTK Holding prepared in accordance with the Credit Rating Methodology for Corporates (Issuers) and Financial Assets rev. February 18, 2015.

The rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's creditworthiness and shall not be construed as a recommendation to purchase or sell securities, or to lend funds.

AK&M Rating Agency shall not be held liable 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. CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010) and is on the Central Bank of Russia's Register of Accredited Rating Agencies.


AK&M Rating Agency

Ul. Gubkina 3, Moscow, Russia

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