OREANDA-NEWS. March 03, 2010. A court in the Volga district has approved Roskomnadzor's request to annul GSM licenses that had been granted in three regions to NCC, a mobile operator belonging to Svyazinvest's Volga Telecom, Vedomosti reported. The court found that NCC had failed to build the number of base stations required under the terms of the licenses, reported the press-centre of OTKRITIE Financial Corporation.

View: The suits brought by Roskomnadzor were part of a group of cases the agency filed in late 2009 against the holders of 79 GSM licenses granted in 2007. Defendants in the other cases include other Svyazinvest subsidiaries and Skylink, which is slated for acquisition by Svyazinvest. The annulment of the Volga licenses suggests that government-owned Svyazinvest is not guaranteed special treatment from regulators, although in the case of Skylink they may be able to argue convincingly that as new owners they should be given an extension in order to comply with license terms. 

Valuation: The regional telecom operators trade on a 2010 EV/EBITDA in the range of 2.7-4.7x. 

Action: The impending swap ratio announcement may overshadow any reaction to this news. We reiterate our HOLD rating on Volga Telecom.