OREANDA-NEWS. January 19, 2010. Comstar has filed for approval of the purchase of a 100% stake in Tenzor Telecom, an alternative operator in Yaroslavl serving 22k private and 1k corporate clients. It had estimated revenues in 2009 of RUB145m. The acquisition price is rumored to be US8m, according to Kommersant, reported the press-centre of OTKRITIE Financial Corporation.

View: We take the news positively as it is shows that Comstar's expansion into regions has continued, even after its acquisition by MTS. The size of the deal is too small to impact value directly, but having said that, Comstar shares have underperformed MTS due to the risk of value transfer from Comstar to MTS. More evidence of value creation at the Comstar level would be a positive driver for Comstar shares.

Valuation: Comstar trades on a 2010 EBITDA  of 4.1x, while MTS trades at 4.5x.

Action: We expect positive reaction on Comstar shares and reiterate our BUY rating.