OREANDA-NEWS. March 15, 2010. Subsidiaries of Svyazinvest were awarded all 12 of the latest round of WiMax licenses distributed by Roskomnadzor: Rostelecom garnered 11 of the 11 regions, with the 12th going to Sibirtelecom. Over four rounds, Svyazinvest has won in 39 out of 40 regions, 38 of which have gone to Rostelecom. According to the terms of the licenses, Rostelecom and Sibirtelecom have a year and a half to start offering WiMax service in their regions, reported the press-centre of OTKRITIE Financial Corporation. 

View: The results of the tenders hold little surprise given that their terms were widely considered to have been favorable to Svyazinvest. Other major operators were reluctant to participate because the technical specifications seemed to favor development of WiMax, which they consider a less promising path for 4G than LTE.

They have continued to lobby for LTE, and Minkomsvyaz has asked Roskomnadzor and the Ministry of Defense to designate frequencies for LTE testing zones by March 15. Thus, this is not a major setback for the Big Three. Indeed they may even gain a competitive advantage if Svyazinvest, which is also reportedly interested in participating in the LTE testing zones, spreads itself too thin investing in multiple 4G technologies.

Valuation: Rostelecom trades on a 2010 EV/EBITDA of 10.7x, while Sibirtelecom trades at 3.5x.

Action: Svyazinvest’s victory in these tenders was expected, and has already been priced in. We maintain our SELL rating on Rostelecom with a target price of USD2.55/share.