OREANDA-NEWS. February 08, 2010. Svyazinvest announced plans to list GDRs in a consolidated Rostelecom as early as April 2011. The listing would most likely be on the London Stock Exchange, although additional listings in New York and Hong Kong are also possible, reported the press-centre of OTKRITIE Financial Corporation.

The old shares in the individual companies will be delisted from all exchanges once the new shares have been listed. Svyazinvest values the unified company at US11.2bn. Reportedly, the delisting of RTOs could occur even without the agreement of the minority shareholders. 

View: The threat to delist the individual regional telecoms is a powerful tool in Svyazinvest's negotiations with minority shareholders, who may be inclined to accept a relatively unfavorable swap ratio rather than be stuck with the shares of non-listed company. The correction in regional telecoms seen in the past two days did not fully offset the gains posted on Monday and Tuesday. The companies' shares remain up 5-15% on the week, and we expect further correction. 

Valuation: RTOs trade on a 2010 EV/EBITDA of 3.8-4.5x, while Rostelecom trades at 8.2x.

Action: We expect further decline in the regional telecoms, with South Telecom and Central Telecom trading at the highest multiples.