Daily analyst comments

Uralsvyazinform upgraded its infrastructure


	Uralsvyazinform

Capitalization: 1 397 526 827,84 $

Common shares
Price	0,036 $

Price changing
week	month	year
0,7%	8,3%	70,8%

Preferred shares
Price	0,031 $

Price changing
week	month	year
0,2%	7,4%	87,5%

05.12.07 11:53

Infrastructure modernization is a positive step, but it should be in line the needs of the operator’s customers. We are neutral about this news until the management demonstrates to the investors the financial outputs expected from the new NGN services.

December 4, 2007, the official press-release of the company stated that Uralsvyazinform completed the modernization of the mainline segment of its multiservice network. The project was implemented in cooperation with a major Russian integrator NVision Group. This project involved the convergence of the network’s mixed segments and creates a single transport infrastructure supporting advanced up-to-date data services (IP, telephony, and video) to all of the 235 cities and towns where Uralsvyazinform operates.

This network upgrade project appears to be a timely decision aimed at the further diversification of the company’s revenues. Theoretically, it would be able to provide high-revenue communication services, such as IP-TV, video-on-demand and broadband Internet access. Nevertheless, until the management demonstrates realistic forecasts on the revenues from such services, we are apt to neutrally accept any information about the network upgrade. Infrastructural changes among the Russian interregional communication companies have not always resulted in higher revenues.

We do not expect that this news would have any impact on the company’s stock or its financial model. We maintain our Sell recommendation for commons at the fair value of USD 0.064 and a Hold recommendation for preferred shares with the fair value of USD 0.040.

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