The rating action follows the merger of "UTK" PJSC with 9 other telecom incumbents in the southern federal region of Russia. This has resulted in a stronger overall competitive position and improved business profile for "UTK" PJSC.

In "Standard & Poor's" analysts` opinion, the new merged company should benefit from it larger scale by receiving better terms from vendors of telecom equipment and other economies of scale. The merger will also give it a stronger market position and make it easier to access to capital markets. The stable outlook on "UTK" PJSC assumes that the company will continue with structural reorganization, management improvement, and network modernization, and that it will execute its business plan without materially weakening its financial profile and ability to service its obligations.