OREANDA-NEWS. May 26, 2010. Svyazinvest has recommended to the boards of Rostelecom and the RTOs a USD 350m employee option program. 60% of the options would vest in 18 months (November 2011), with the remaining 40% vesting in November 2012. The exercise price will be set when the program is launched, reported the press-centre of OTKRITIE Financial Corporation.

View: This will be the first incentive program of its kind for Svyazinvest subsidiaries, and we view it as a positive step towards employee motivation and accountability. 

Valuation: The consolidated Rostelecom trades at an implied 2010 EV/EBITDA of 4.2x, compared with Vimpelcom, which trades at 3.9x. 

Action: We reiterate our SELL rating on Rostelecom and a target price of USD 2.55/share.