We don’t like Uralsvyazinform’s stagnation, FINAM says

FINAM Investment Company reduced its just price assessment of Uralsvyazinform’s ordinary shares from $.064 to $.063; FINAM believes the mobile and landline operator’s preference shares must drop from $.04 to $.034. The company still feels it’s best not to sell the shares right now. Apart from that, FINAM’s analysts believe Uralsvyazinform is slightly overpriced at the moment and see no noticeable factors that could enhance the operator’s worth.

FINAM’s assessment of Uralsvyazinform’s shares was modified after the investment company’s experts looked into the operator’s audited non-consolidated financial data (presented in accordance with the Russian accounting standards) for the year 2007 and for the first quarter of 2008.

‘Uralsvyazinform’s financial data look somewhat ambiguous. We don’t like the current stagnation in the landline telephone connection market segment. The company only managed to raise the number of its landline subscribers by less than 1% last year, which is by no means a good result,’ FINAM reports.

In addition, it was announced in the spring that the Federal Tariff Service was not planning to increase the local phone call fees in 2008; moreover, the fees would rise slower than the inflation rates in 2009 and 2010. This is not good for Uralsvyazinform, as the company is now expected to make less profit in terms of local calls.

‘Uralsvyazinform’s revenue only went up by 7%, which is neither good nor bad. We would expect a 9% increase by the end of 2008 (with data presented in accordance with the IAS). Still, the unchanged local calls tariffs have brought this market segment to stagnation,’ FINAM explains.


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