Press Releases / 30.06.2014

Press Release as of 30.06.2014

T2 RTK Holding LLC

CJSC AK&M Rating Agency assigned an 'A+' credit rating on the national scale to T2 RTK Holding LLC. The outlook is stable.

CJSC AK&M Rating Agency assigned an 'A+' credit rating on the national scale to T2 RTK Holding LLC. The outlook is stable.

The 'A+' rating indicates that the Company is highly creditworthy. The risk of a failure to meet obligations in time is insignificant.

Limited liability company T2 RTK Holding is a holding company intended to consolidate the mobile assets of OJSC Tele2 Russia Holding AB and OJSC Rostelecom so as to bring a new federal-scale mobile operator under the Tele2 brand to the market. The parties signed the agreement to merge the mobile assets by setting up a joint venture in early February 2014. Upon completion of the integration process, entities of the VTB Group and its partners (Tele2 shareholders) will own at least 55%, Rostelecom up to 45% of the new operator. The Company is supposed to have picked up ca. 56 million subscribers and to have captured up to 25% of Russia's mobily telephony market by 2018.

At the first stage of the deal process (March 2014), T2 RTK Holding assumed control over the operations and finances of Rostelecom's seven subsidiaries providing mobile telephony services. As of April 1, 2014, the Company's ownership perimeter included 25 mobile operators (excluding CJSC SkyLink's subsidiaries). At the second stage, Rostelecom will contribute its wholly owned subsidiary CJSC RT-Mobile uniting Rostelecom's remaining unbundled mobile assets, along with LTE licenses worth a total of RUB 27 billion to the joint venture.

The Company's credit rating reflects the bright development prospects for a new federal-scale operator based on Tele2's effective and cost efficient business model which has proven to be highly competitive in the Russian mobile telephony market.

Tele2's subscriber base currently reaches ca. 24 million customers, and is steadily growing (4% in 2013).

The Company's strong operating and financial performance has contributed to its rating. In 2013, the operator's total revenues increased by ca. 10% year-on-year to RUB 65.3 billion, the highest growth rate among the major market players. All the profitability ratios improved; the Company's net profit increased by 4.6%.

The key financial indicators continued to grow early this year; of particular note is the quarterly EBITDA margin increase (to 39.1% in January-March 2014 from 36.4% in the previous quarter).

The financial backing from the credit institutions known to be the Company's ultimate beneficiaries (VTB Group, Bank Rossiya) is another positive signal for the credit rating of T2 RTK Holding.



At the same time, we regard the moderately high level of infrastructure risks, including the need for extra investments in the development of 3G and 4G networks and the Tele2 brand building in the regions the Company has recently entered (primarily, Moscow and Moscow region), as a negative rating driver. Another risk factor is that being the asset integrator, the Company inevitably assumes its subsidiary companies' financial risks including those arising from debt liabilities. Besides, we highlight the Company's relatively weak liquidity position: at the end of the first quarter of 2014, the current ratio (current assets to current liabilities) was a mere 16%.

Limited liability company T2 RTK Holding is a joint venture intended to consolidate the mobile assets of OJSC Tele2 Russia Holding AB and OJSC Rostelecom. As of April 1, 2014, the company's equity capital was ca. RUB 100 billion, assets amounted to RUB 126 billion. The Company's reports are audited by the Russian arm of Ernst & Young LLC.


This press release is based on the Statement of assignment of a credit rating to T2 RTK Holding LLC.

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.

CJSC Analysis, Consulting and Marketing 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.


CJSC AK&M Rating Agency

ul. Gubkina 3, Moscow, Russia


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