OREANDA-NEWS. February 10, 2010. Svyazivest management met with the analysts, discussing its preliminary 2009 results and the valuations of its subsidiaries, reported the press-centre of OTKRITIE FC.

View: The key takeaway was that the market valuations will be taken into account when deciding on swap ratios, news that we see as negative for RTO shareholders, but positive for Rostelecom shareholders. Also noteworthy was the fact that management intends to retain the 10% payout for Rostelecom preferred shareholders, which implies a dividend yield of 18% (after the restructuring). While this sounds too good to be true, Rostelecom preferred shares are likely to be in demand in the short term.

Valuation: Based on the preliminary 2009 results, RTOs trade on a 2009 EV/EBITDA of 3.5-4.5x, while Rostelecom trades at 11x.

Action: We expect a correction in both the common and preferred shares of regional telecoms, while preferred shares of Rostelecom should advance.