On November 24, 2022, the analytical credit rating agency upgraded the credit rating of Selectel LLC to A+(RU), the outlook is stable, and its bonds to A+(RU). This is stated in the agency's message.
The increase in the credit rating of Selectel LLC is due to a significant reduction in the debt burden and an increase in the coverage of fixed payments in 2022. At the moment, the assessment for the size of the company's business is at the "below average" level, however, ACRA believes that against the background of increasing demand for the services provided by the company and rising prices for them, the weighted value of FFO before fixed payments and taxes of Selectel may move to a higher category in 2023. ACRA has maintained high assessments of the Company's market position and business profile, a very high assessment of the level of profitability and a strong assessment of liquidity.
Significant capital expenditures (CAPEX) of the company continue to put pressure on its free cash flow (FCF), however, the expected decrease in CAPEX after 2022 may cause FCF to move into a positive zone. The further dynamics of FCF will also be determined by Selectel's dividend policy, which, according to the agency, has not been fully determined at the moment.
Selectel is a Russian data center network operator providing IT infrastructure services. The company rents dedicated servers (bare metal), provides services for the creation of private and public cloud services and hosts clients' server equipment in its own data centers. The company owns four data center sites of the third and fourth levels of reliability (TIER III and TIER IV) in Moscow, St. Petersburg and the Leningrad region.
