Russian telecommunication companies become transparency leaders in world's rating list
Standard & Poor's rating agency conducted a research "Informational transparency of the Russian companies in 2005"
Russian companies are becoming more and more transparent every year. Their transparency (informational openness) index increased from 46 percent in 2004 to 50 percent in 2005. These data is presented in the research “Informational transparency of the Russian companies in 2005” conducted by the Standard & Poor's rating agency supported by the Moscow Interbank Currency Exchange.
54 largest companies on the market of capitalization that have liquid stocks were studied. Their total market capitalization makes up $276 billion or 90 percent of the Russian stock market.
The leader in informational transparency is telecommunication company MTS, whose index is 84 percent. Last year it occupied the third place in rating list. It is worth mentioning that the five first companies in the list are those that passed New York Stock Exchange listings. This obliges them to keep high levels of transparency, which is established by Securities and Exchange Commission of the US.
Half of the first twenty companies are those working in telecommunications. “They need investments the most and attract them on the market”, the head of the rating service of corporate governance of S&P, Yulia Kochetygova explains. “Telecommunication companies use all possible resources to attract finances, and the informational openness is the cheapest of them.” Gazprom occupies the 16th place, RAO UES is the 26th, Sberbank is the 35th and YUKOS, which occupied the 3rd place in 2002, occupies the 48th at the moment.
The most non-transparent, according to the rating, is Rambler Media, Pyatyorochka and Evrazholding. This was a surprise for S&P as these companies had IPO on London Stock Exchange in May – June this year.
“It looks like necessary information was published in the outline of the emission spread directly among the investors and sent to the British regulating institution FSA, which unlike SEC does not publish the materials in the Internet”, the research reports.
The research was conducted only with the help of open resources: annual reports, submitted to the regulators, and the information placed in the Internet. The questionnaire of research consists of 100 points concerning the structure of property and rights of shareholders, financial and operational information, structure and procedure of the performance of board of directors and management. The average value of the informational openness in these blocks is 50 percent. The highest index of openness is in the non-financial information sector, the research reports. The closest data remain those about rewards of managers and members of the board of directors. In 2005 all in all 36 companies improved their transparency indices by average 9 percent if compared with 2004. The indices of ten companies worsened by average 4 percent.
Russia completely corresponds with Turkey, where similar research was conducted, by the level of transparency index. In Europe such research was conducted in 2003 among 127 British companies. “The transparency index comprised 71 percent there. And it was determined with the use of annual reports only,” Ms Kochetygova says. “If we take into account all these factors, we may say that the British index is much higher than the Russian”.
“The transparency index is going to increase further,” she continues. “However, to provide for its quantum leap, something very important on the level of the government’s political ill must happen, something that will increase the transparency of the large state corporations. This will set an example for private companies.”
The head of the department of the corporate governance of the Ministry of Economic Development and Trade, Alla Popova, says, “Increase in transparency of the Russian companies is taking place when there are no new compelling legal regulations. This means that they are eagerly face the disadvantages of revealing the information, because they feel the opportunity to gain profit and see the growth dynamics of their own value”. According to the deputy CEO of the Moscow Interbank Currency Exchange, Valeriy Petrov, the higher transparency level is the more dynamically the value of the company's shares increases. “In 2005, when the transparency index made up 50 percent, Russian companies attracted five billion dollars through IPO,” Mr. Petrov says. “We predict that in 2010 the total IPO will reach ten billion dollars, with the transparency index that will be 70 percent playing a very important role”.