OREANDA-NEWS. September 16, 2009. Prime Minister Putin approved a deal between the government and Sistema in which the 25%+1 stake in Svyazinvest goes to Vneshekonombank, Vedomosti reported, citing a source from Sistema, reported the press-centre of OTKRITIE FC.

View: The structure of the deal is slightly less favorable to Sistema than previously rumored, as it appears that Sistema must first buy a 50% stake in Skylink from RTDS before handing over a 100% of Skylink to Svyazinvest. For this, Sistema will require compensation from Comstar, though the details regarding intra-group compensation are yet to be finalized. Based upon the government’s valuation of the Svyazinvest and MGTS stakes, Comstar could owe Sistema as much as RUB14bn (or \\$450m). This would still mean that Comstar’s debt would be halved.

Valuation: Comstar trades at a slight discount to its peers on 2009 P/E of 9.8x.

Action: We reiterate our BUY recommendation for Comstar, and a US6.5 target price.