IBI-Rating has affirmed credit ratings of «Ukrtelecom» PJSC and its issues of interest-bearing bonds

IBI-Rating informs on affirming of the long-term credit ratings of «Ukrtelecom» PJSC and its issues of interest-bearing N-Q and T-V series bonds at uaА grade with a «stable» outlook.

«Ukrtelecom» PJSC is the largest operator of telecommunication services in Ukraine, its major shareholder is «ESU» LLC. In June 2013, «System Capital Management», the leading financial and industrial group of Ukraine, acquired 100% stake in the Cypriot company UA ТELECOMINVEST LIMITED, which owns corporate rights for «ESU» LLC.

«Ukrtelecom» PJSC provides a wide range of services for households and businesses, including: local (urban and rural), long distance and international telephone services, 3-G mobile communication services, computer communication services (including Internet access), telegraph communication and wire broadcasting services, as well as services of providing telecommunications channels for use. The issuer holds leading positions in the fixed line market and broadband Internet access, which are provided by its own powerful transport telecommunications network, covering all regions of the country. Also, prospects of the telecommunication services market cause intensified competition. There is a decline in demand for fixed line services and its gradual replacement by mobile communication services, which corresponds to the global trend.

In March 2012, the Supervisory Board of «Ukrtelecom» PJSC adopted the decision on the public placement of registered interest-bearing bonds of N-Q series for the total amount of UAH 600 mln. with the circulation period until February-November 2017. The purpose of raising funds was ensuring reliable operation and maintenance, as well as improving efficiency of the existing telecommunications network and upgrading of the network infrastructure. In December 2013, a decision was adopted on the public placement of registered interest-bearing bonds of S-V series for the total amount of UAH 1.4 bln. with the circulation period until March-December 2020. The raised funds are used for ensuring reliable operation and maintenance, improving the efficiency of the existing telecommunications network, as well as upgrading of the network infrastructure.

In April 2015, the decision of the NSSMC cancelled the registration of the series S bond issue. Liabilities on the placed series of bonds decreased due to repurchase of part of bonds and, as at 30.09.2016, amounted to UAH 691.7 mln. For 9 months of 2016, net revenue of «Ukrtelecom» PJSC amounted to UAH 4 758.2 mln., the result of activity was net profit in the amount of UAH 249 mln., while a significant amount of uncovered loss of previous years remained. Considering the amount and structure of debt liabilities, at the end of September 2016, the debt burden level of «Ukrtelecom» PJSC was estimated as low.

In order to conduct the analytical research the materials provided by «Ukrtelecom» PJSC have been used, including: the annual financial statements for 2013-2015 and 9 months of 2016 , background information on activities of «Ukrtelecom» PJSC, information on the issue of bonds, other necessary internal information, as well as the information from the public sources, which the Rating agency considers credible.