ACRA has assigned the “Rating under review: developing” status to the credit rating of PJSC VimpelCom (hereinafter, VimpelCom, or the Company) due to the announcement made by its parent company, VEON Holdings B.V., on its plans to sell the Russian business segment.
The Company’s current credit rating, AA-(RU), stems from its strong operational risk profile. ACRA took into account the high likelihood of parent company VEON Holdings B.V. providing extraordinary support in terms of access to the group’s liquidity sources. VimpelCom is currently a key asset of VEON Group, and cross-default provisions have been established for a number of liabilities.
VimpelCom’s financial risk profile was assessed as medium, largely due to its leverage increasing to medium in 2021–2022 as a result of the increase in the lease component of adjusted debt due to the sale of cellular tower infrastructure. The Agency noted the high profitability and very large size of the Company’s business, as well as its strong liquidity assessment and low cash flow assessment.
VimpelCom is one of the largest Russian communication operators, providing services under the beeline brand. The Company currently operates in Russia and Kazakhstan. As of June 30, 2022, the Russian mobile communications segment had 47 mln clients, while the broadband internet segment had 3 mln clients.
potential outlook or rating change factors
The “Rating under review: developing” status indicates a variety of trends: the rating may stay unchanged, be upgraded, or be downgraded.
Removal of the “Rating under review: developing” status and affirmation of the credit rating may be prompted by:
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Assessment of support from the new owner that is sufficient to affirm the rating;
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Maintaining the current ownership structure.
Removal of the “Rating under review: developing” status and upgrading the credit rating may be prompted by:
- Higher assessment of support from the new owner.
Removal of the “Rating under review: developing” status and downgrading the credit rating may be prompted by:
- Lower assessment of support from the new owner.
rating components
Standalone creditworthiness assessment (SCA): a+.
Support: the previously assigned rating took into account the high likelihood of extraordinary support being provided by VEON Holdings B.V. if necessary. In view of this support, the Company’s credit rating was set at AA-(RU).
issue ratings
No outstanding issues have been rated.
REGULATORY DISCLOSURE
The credit rating has been assigned to PJSC VimpelCom under the national scale for the Russian Federation based on the Methodology for Credit Ratings Assignment to Non-Financial Corporations under the National Scale for the Russian Federation, Methodology for Analyzing Rated Entities Associated with a State or a Group, and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
The credit rating of PJSC VimpelCom was published by ACRA for the first time on June 16, 2022. The credit rating and its outlook are expected to be revised by June 16, 2023.
The credit rating was assigned based on data provided by PJSC VimpelCom, information from publicly available sources, and ACRA’s own databases. The credit rating is solicited, and PJSC VimpelCom participated in its assignment.
In assigning the credit rating, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided no additional services to PJSC VimpelCom. No conflicts of interest were discovered in the course of credit rating assignment.
