OREANDA-NEWS. September 13, 2010. Svyazinvest CEO Evgeny Yurchenko has reportedly decided to leave the company due to strong disagreements with the management of Rostelecom regarding the company's restructuring, reported the press-centre of OTKRITIE Financial Corporation.

View: We take the news negatively, as it suggests that Mr. Yurchenko was unable to deliver on his promises related to the restructuring of Rostelecom. Specificaly, he was the one strongly advocating aligning the interests of minority shareholders with those of management. We think the market will also question the fate of the new dividend policy that is due to be voted on at the Rostelecom EGM on 10 Novemeber. Consequently, we recommend that investors take profits in Rostelecom prefs and RTOs.

Valuation and Action: The consolidated Rostelecom trades on a pro forma 2010E EV/EBITDA multiple of 3.8x. The common shares are down 12% YTD and prefs are up by 60%, while the RTS Index has risen just 3.2% YTD. We expect weakness in Rostelecom prefs and in the RTOs.