OREANDA-NEWS. July 01, 2010. Svyazinvest held a regular meeting of its Board of Directors in Moscow.

The Board of Directors of the Company passed a resolution to convene the annual general shareholders meeting (AGM) at 4 pm, 38 Prechistinka St., Moscow, on July 12 with the following items on the agenda:

Election of the members of the audit committee of the Company;

Approval of the Company’s annual financial statement;

Approval of the annual accounting reports, including the income statement (profit and loss accounts) of the Company;

Approval of the allocation of the profit from the Company’s 2009 financial results;

On the size, schedule and form of payment for dividends to be paid out on 2009 financial results;

On payment of remuneration for work performed under the Board of Directors (Steering Committee) to members of the Board of Directors who are not state employees in the amount provided for in the Company’s in-house documents;

Election of members of the Board of Directors (Steering Committee);

Election of members of the Audit Committee (auditor) of the Company;

Approval of the Company’s Auditor;

On the approval of an interested-party transaction – a swap agreement of the common, nominal, uncertified shares of MGTS for the common, nominal, uncertified shares of Sky Link, which is to be stipulated between Svyazinvest and Sistema-Inventure;

On the approval of an interested-party transaction – a security ship agreement which is to be stipulated between Svyazinvest and AFK Sistema;

As part of the preparations for the annual general shareholders meeting the Board of Directors reviewed the Company’s annual financial statement and approved it.  The Board of Directors also took under advisement the recommendations of the AGM on the allocation of the Company’s net profit, advising that RUR 87,466,746 (25% of net profit) be allocated for dividend payout and RUR 262,400,237 (75% of net profit) be allocated for raising shareholder capital. This way, 2009 dividends will amount to RUR 0.00448126011 per one common share.

The Board of Directors also approved the results of a public tender for the right to retain an auditor to conduct the Company’s mandatory annual audit under RAS for 2010 and recommended the AGM to approve KPMG as the Company’s 2010 auditor.

The Board of Directors reviewed a range of issues pursuant to the exchange transaction scheduled to take place with AFK Sistema and recommended the AGM to approve a swap agreement of the common, nominal, certified shares of MGTS for the common, nominal, certified shares of Sky Link, which was concluded between the Company and Sistema-Inventure.  The agreement contains the following material conditions: the Company is obliged to hand over to Sistema-Inventure its common, nominal, certified share of MGTS, which account for 23% of the latter’s charter capital.

Sistema-Inventure, in exchange, will be required to hand over its stake of common, nominal, certified shares in Sky Link, which amounts to 50% of the operator’s charter capital.  The parties to the swap transaction agreed that the shares to be exchanged will not have the same value.  Thus, according to the data in a report released by appraiser Ernst & Young, which was approved by the Board of Directors, the value of the Company’s stake in MGTS amounts to RUR 9.75 bln, while AFK Sistema’s stake in Sky Link is valued at RUR 9.3 bln.  Based on this estimate, in line with the agreement, Sistema-Inventure is required to pay the Company the difference between the value of swapped shares in the amount of RUR 450 mln.

By entering into this transaction, Svyazinvest will acquire 100% control over Sky Link, a major wireless operator.  The transaction will give Svyazinvest access to the most developed mobile datacom network in Russia.  In addition, Sky Link has points of presence in Moscow and the Moscow region, which will enable the Svyazinvest Group of companies to enter the Moscow cellular market.

In addition, in accordance with an executive order of the President of the Russian Federation on taking actions aimed at expediting technological modernization an innovative development of companies with state participation, the Ministry of Economic Development of Russia has taken the lead in examining a range of issues related to innovative development, the support of research and upgrade of technologies and infrastructure at the Svyazinvest Group of companies.

The Board of Directors also approved materials prepared by the Ministry of Economic Development of Russia and instructed the executive bodies of the Company to prepare and submit proposals for review to the Board of Directors on the following issues:  (1) on the development of an innovative development program for the Svyazinvest Group of companies;  (2) on expenses for research activities and modernization of technologies, the advisability of creating innovative development and R&D funds; (3) on participation in emerging technological platforms.

In addition, the Board of Directors of the Company analyzed a study on the main operating and financial indicators of telecom design institute Giprosvyaz.  Speaking at the meeting, the general director of the company Evgeny Yurchenko pointed out that the company’s strategic challenge is to set up an industry-wide customer competence center (CCC) for the purpose of phasing in innovative technologies and services.

At the end of the meeting, the following presentation was made to members of the Board of Directors: Long-Term Incentive Program for Top Managers of the Svyazinvest Group of companies, which was preliminarily approved at a joint meeting of the Executive Compensation and Strategic Business Planning Committee of RTOs and Rostelecom.  The Board of Directors took this program under advisement.

The board also examined a number of other questions related to the Company’s internal activities.