OREANDA-NEWS. June 21, 2010. Svyazinvest is hiring vendors to harmonize equipment and billing systems across its mobile assets in preparation for the consolidation of Rostelecom and the regional operators, reported the press-centre of OTKRITIE Financial Corporation.     

View: Consolidation should bring cost synergies in the long run, although there is a short-term risk of disruptions during the transition that could alienate clients. Revenue synergies are less likely, although brand unification could bring some benefit. Regardless, we expect to see a decline in Rostelecom's mobile market share due to its lack of a 3G network. 

Valuation: The consolidated Rostelecom trades on 2010 EV/EBITDA of 4.1x, compared to Vimpelcom and MTS, which trade at 4.0x and 4.6x, respectively. 

Action: We expect neutral market reaction, as the market is focusing on arbitrage opportunities during the restructuring process. We retain our preference for Vimpelcom and MTS.