Fitch Revises Outlook for Russian Telecom Company T2 RTK From Stable to Negative

The Fitch ratings agency changed its outlook Russian telecommunication holding T2 RTK from stable to negative due to the company's entrance into the Moscow market and an active expansion in other new regions has put pronounced pressure on its margins and cash flows.

WASHINGTON (Sputnik) — The Fitch ratings agency has revised on Friday the outlook for Russian telecommunication holding T2 RTK from stable to negative, affirming the company’s long-term issuer default rating at ‘B+’.

"The change in the Outlook reflects our expectations that leverage will be higher than previously expected in 2017 and 2018," the agency said in a press release. "The company's entrance into the Moscow market and an active expansion in other new regions has put pronounced pressure on its margins and cash flows."

The outlook revision was related to the agency's forecast that T2 RTK's deleveraging would take longer than expected. The negative outlook also reflects increased competition in the Russian market of mobile operators, according to the agency.

Fitch added that the company’s entrance into the Moscow market was effective as it brought over 2 million new subscribers for the company. However, the operating success came at high price with overall low profitability for the business.

T2 RTK owns the Tele2 brand that provides cellular services in 41 subjects of the Russian Federation.