OREANDA-NEWS. August 19, 2010. The Boards of Directors of the regional telecoms have approved 9M10 interim dividends, reported the press-centre of OTKRITIE Financial Corporation.

View: The dividends were expected, consistent with previous announcements made by Svyazinvest. These are likely to be the last dividends paid by the RTOs;  we anticipate that the consolidated Rostelecom will pay marginally lower dividends. Although there may be a slight correction in the share prices following the record dates, the undersubscription of the buyout offers suggests that investors want to hold these names. Although the preferred shares have a higher dividend yield, they are also trading at an even larger price premium, as measured by the implied price of a share of the consolidated Rostelecom. We expect this gap to narrow as the date of the merger approaches.

Valuation & Action: The consolidated Rostelecom trades on a 2010 EV/EBITDA of 3.8x. We expect neutral reaction to the news.