OREANDA-NEWS. September 16, 2010. Former Svyazinvest CEO Evgeny Yurchenko gave an interview to Vedomosti in which he criticized the role of Marshall Capital Partners (MCP) and its managing partner Konstantin Malofeev in the management of Rostelecom and the RTOs. According to Yurchenko, starting in early 2010 decision-making functions began being transferred from Svyazinvest to MCP, culminating in the appointment of Aleksandr Provotorov as Rostelecom CEO this July. In particular, Yurchenko criticized the contracting of MCP affiliates for 80% of the Svyazinvest Group's infrastructure projects worth RUB12bn. Yurchenko said he was asked to resign following his disagreement with the expensive acquisition of Akado, which he said was negotiated by Malofeev and Provotorov without consulting Svyazinvest or CenterTelecom, reported the press-centre of OTKRITIE Financial Corporation.

View: Yurchenko has made it clear via this interview that he will not go without a fight. In the improbable event that he manages to retain his position, we would most certainly see changes in Rostelecom management. In either case, the story of efficiency improvement in the government company is now being overwhelmed by internal management struggles. We recommend switching to MTS and Vimpelcom, which should benefit from the infighting at Rostelecom.

Action: While in the short run we might see growth in Rostelecom common shares (as these are illiquid), we still recommend switching into MTS and Vimpelcom.