Standard & Poor's international rating agency has assigned a long-term credit rating to the local and foreign capital of the leading Nizhny Novgorod regional telecom company OJSC Nizhegorodsvyazinform. The credit rating is B- with a stable outlook.  The basis for assigning the rating was an independent evaluation of the company's business indicators both as business units and the macro-economic climate of the Nizhny Novgorod region.  

According to the rating agency (www.standardandpoors.ru), the following factors had a positive impact on the company's rating:

-          a conservative financial policy and stable financial condition with net debt to EBITDA less than 1x, net debt to equity of less than 20% and EBIT margin over 20%;

-          the company's dominant position on the Nizhny Novgorod telecom market with a market share of around 73%;

-          the company's network is equipped to handle per-minute billing for virtually all users.

The restraining factors which S&P's analysts cited, were as follows:  

-          current local tariffs are insufficient to cover costs and cross-subsidization;

-          tough competition on the value-added telecom market;

-          serious investment needs to upgrade the company's existing telecom network;

The press release also says that the rating is not associated with the ongoing merger process in Russia which involves 78 telecom operators.  Under the framework of the nationwide merger process 10 regional operators will be merged with OJSC Nizhegorodsvyazinform.  The merged entity plans to go public sometime towards the end of 2002 or the beginning of 2003, after which the rating will be reviewed.  

The stable outlook reflects the company's sound position on the Nizhny Novgorod telecommunications market.  The company is deemed capable of maintaining its leadership position and sustainable development.