OREANDA-NEWS. February 16, 2010. The Ministry of Communications will ask the Ministry of Defense and Roskomnadzor to designate frequencies for the testing of LTE (4G) networks by 15 March, Kommersant reported. Four zones are to be created -- one each for MTS, Vimpelcom, Megafon and Svyazinvest, reported the press-centre of OTKRITIE Financial Corporation.     

View: The move is consistent with previous government pronouncements, but continuing progress and government support in this area are still long-term positives for the mobile sector. Despite a lag of about 8 years on 3G, Russia can leapfrog into the next generation of data transfer technology, LTE. Svyazinvest's presence in the group is particularly significant, as it lacks 3G frequencies/licenses.  

Valuation: MTS trades on a 2010 EV/EBITDA of 4.2x, compared to Vimpelcom at 4.4x.

Action: We expect a neutral market reaction, as this news was not a surprise.