OREANDA-NEWS. April 15, 2010. Rostelecom is seeking to issue RUB30bn bonds to complete its planned asset swap with Sistema. In return for the 25%+1 share of Svyazinvest currently held by Comstar, Rostelecom has agreed to assume a RUB26bn loan. Svyazinvest head Yevgeny Yurchenko told Vedomosti that the RUB4bn balance will be used to develop the mobile assets of Skylink, which will also be transferred from Sistema to Svyazinvest as part of the deal, reported the press-centre of OTKRITIE FC.

View: Yurchenko now expects the asset swap to occur by the end of the second quarter, though it was originally scheduled to be completed in February. While it will take some time to issue a bond, delays are in the interest of neither party, as the deal is a prerequisite for the restructuring of Rostelecom and MTS's likely consolidation of control of Comstar. Comstar, however, has negotiated an extension of principle payments on the RUB26bn loan until September, minimizing their risks in the delay. 

Valuation: The consolidated Rostelecom trades on a 2010 EV/EBITDA of 4.9x, compared with Comstar, which trades at 3.9x. 

Action: Further delays are negative for Comstar. Following the recent rally in the stock, we might see some profit-taking on the back of this news. The news is neutral for Rostelecom.