The agency has upgraded Megafon's $375-million loan participation notes due 2009 from B1 to Ba3.
The agency said the upgrade reflects MegaFon's "continued robust operational and financial performance", "expected free cash flow position for the year 2006", further streamlining of capital structure, and "modest leverage of approximately 0.9x Total Debt to EBITDA."
"At the same time the ratings continue to take into account the company's unresolved shareholder dispute to the extent that it does not have an immediate impact on the company's operating activity. However, it does limit visibility as regards financial policy and potential dividend payments, particularly in light of the company's positive free cash flow generation," Moody's said.
MegaFon was established in 2002. Its shareholders are the Finnish-Swedish TeliaSonera (35.6%), Telecominvest (31.3%), CT-Mobile (25.1%), IPOC International Growth Fund Ltd. (8%).
The company posted it revenues in January-September at $2.616 billion, a 55% rise on the same period of 2005. Profit before interest, taxes, depreciation and amortization (EBITDA) grew 69% year-on-year in the reporting period to $1.320 billion. Megafon's net profit in July-September saw an increase of 170% year-on-year.
