OREANDA-NEWS. February 27, 2010. The Ministry of Communications has published a new set of technical guidelines for the construction of telecommunications infrastructure, according to Vedomosti, reported the press-centre of OTKRITIE Financial Corporation.

The current guidelines, adopted in 2005, provide only for channel-switching technology, a fact that that has complicated operators' ability to construct next-generation networks based on packet-switching technology. The proposed new guidelines, which would lift these technological restrictions, would go into effect starting in 2011. 

View: The changes would allow current data network providers to offer voice service, which will intensify pressure on the fixed-line incumbents. The cost savings for incumbents are likely to be negligible, while newer operators will receive meaningful benefits. 

Valuation: MTS and Vimpelcom trade on a 2010 EV/EBITDA of 4.5x and 4.7x, respectively, compared to regional operators, which trade in the range of 2.7-4.7x. 

Action: We would normally expect a negative reaction in regional telecoms on such news, but given the swap ratio annoucement expected next month, the stocks might not react. We reiterate BUY ratings for MTS and Vimpelcom.