Daily analyst comments

Dagsvyazinform: 92.2% of shareholders vote for restructure


	Rostelecom

Capitalization: 3 723 345 840,78 $

Common shares
Price	4,03 $

Price changing
week	month	year
1,5%	8,9%	-21,4%

Preferred shares
Price	3,22 $

Price changing
week	month	year
-6,0%	29,8%	98,6%

27.07.10 10:35

Dagsvyazinform was the last Svyazinvest subsidiary to vote for the merger with Rostelecom. The eventuality means that the process of Svyazinvest restructure is going according to plan, which should minimize transition period risks.

On July 26, shareholders of Dagsvyazinform (RTS: DAGI) convened for a repeated EGM: Svyazinvest representatives did not attend the June 17 shareholder meeting for fear that Dagsvyazinform shareholders would fail to muster a 75% quorum necessary for the restructure. Company shareholders voted for the restructure in the form of merger with Rostelecom. As much as 92.4% of company shareholders were present at the meeting, of which 99.7% backed up the reform. Therefore, 92.2% of Dagsvyazinform equity holders cast their votes for the restructure.

Dagsvyazinform was the last of the 8 Svyazinvest subsidiaries that are to be merged with Rostelecom, to vote for the restructure. Of course, the eventuality was anticipated by the market; nevertheless, we regard the news as fairly upbeat, as it shows that the Svyazinvest reorganization goes strictly in accordance with plan voiced by holding management, a factor that should minimize risks related to the restructure process.

We estimate the fair value of united Rostelecom (RTS: RTKM) as of year-end 2011 at USD 5.30 per common share with a 50% upside and USD 3.30 per preferred share with a 40% upside. The rating for both securities is BUY.

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