OREANDA-NEWS. August 16, 2010. Two more regional telecoms, Volgatelecom and Uralsvyazinform, have reported the results of the share buybacks ahead of the merger into a consolidated Rostelecom. Both buybacks were undersubscribed, i.e., will amount to less than the 10% of net assets allowed by law. Volgatelecom will pay out the equivalent of 8.77% of net assets, while Uralsvyazinform will pay out only 2.4%, reported the press-centre of OTKRITIE Financial Corporation.

View: The trend of undersubscription in the RTO buybacks is positive for Rostelecom subsidiaries. The next RTO to announce the results of its share buybacks will be CenterTelecom.

Valuation: The consolidated Rostelecom trades on a 2010 EV/EBITDA of 3.8x. 

Action: We remain neutral on RTOs and negative on the common shares of Rostelecom, which trade at a 29% premium to the cheapest entry point for the new Rostelecom. The cheapest RTOs remain Sibir, Volga and South Telecom common shares.