Fitch Ratings notes in its Rating Action Commentary: "The revision of the Outlooks to Positive reflects Fitch's expectation that the pending merger of the six regional incumbent telecom operators and Rostelecom will result in significant operating and financial synergies."

The single enlarged operator will benefit from a streamlined operating strategy across all its geographies and market segments. The new enlarged operator will be able to promote best practices across Russia and develop a uniform network modernisation strategy and technological solutions which will likely deliver a significant economy of scale and create the potential for substantial capex savings.

The merger will help strengthen the operator's product proposition, particularly in the mass residential segment. The new Rostelecom will be able to bundle local and long-distance voice services, but also broadband, and potentially mobile services into one package. The wider bundling opportunities are a strategic operating advantage, and may become a more pronounced differentiating tool in future. Retail subscribers will receive one bill which will also improve the enlarged company's relationships with end-customers.

Besides, the corporate reorganisation is also likely to improve treasury/debt management efficiency. As a single company, Rostelecom will find it easier to circulate cash between its new branches, which will help streamline leverage and liquidity across the group. Historically, differences in leverage metrics and liquidity/refinancing calls between Svyazinvest subsidiaries have been quite substantial.