OREANDA-NEWS. September 09, 2010. A group of mobile operators has sent a letter to Deputy Prime Minister Sergei Ivanov asking the government not to approve a proposal by Duma Deputy Maksim Korobov that would allow regulators to set the fees that mobile operators charge to each other for interconnection. The operators maintain that the changes would lead to higher tariffs for consumers and would discourage investment in network infrastructure. The government is slated to consider the proposal on Thursday, reported the press-centre of OTKRITIE Financial Corporation.

View: We see the Duma’s proposed regulation of mobile interconnect as negative, as it adds a tool for the state bureaucracy to impact an industry that is currently functioning in a positive manner based upon market principles. Having said that, similar regulation exists in developed countries and thus if approval of the new measure occurs, it should not be overplayed by the market.

Valuation and Action: Vimpelcom and MTS trade on a 2010 EV/EBITDA of 3.9x and 4.7x, respectively. We expect neutral reaction today, but a slight negative reaction if the proposed changes meet with Duma approval on Thursday.