Uralsvyazinform’s falling stock to affect PR campaigns, Vsevolod Chaschin says

12 September 2008 (08:46)

‘The shares of Uralsvyazinform (the telecommunications provider) are very much pressed sales-wise, which is true of most Russian securities, regardless of the branch and capitalization. To bring the markets to a decent equilibrium, one has to wait till the agents go through with the options and futures transactions. The telecommunications branch has nothing to do with the current downfall of stock prices or indices. This branch has its own operation procedures, its own capital investment programs, and its own free flow of capital, all of which shape the financial outlook that matters in investors’ decision-making,’ Vsevolod Chaschin, General Director of Blagodat Securities Investment Company, said to UrBC.

The stock market has gone through another major decline recently when RTS and MICEX indices fell by 7.51% down to 1,395.11 points and by 9.08% down to 1,158.07 points, respectively. Uralsvyazinform’s shares lost more or less the most, dropping by 12.5% by the end of the day. RTS ended up having to stop trading the company’s shares.

‘The company will probably have to reconsider its dividend policy and keep an eye on the capital structure in order to be in control of its credit ratings, loan options and the like,’ the expert added.

‘Uralsvyazinform will also have to become a less active borrower, since the borrowed resources could definitely grow costlier for them. This, in its turn, will hit the end users in the long run; besides, the company will have to cut down on its investment program and the planned dividends for the next few years. It’s reasonable to cut back on PR projects and sponsorship to begin with: these are responsible for supporting a business’s goodwill, and goodwill is something that is most subject to destruction during a crisis. Uralsvyazinform had better finish up all of its investment projects and minimize the expenses on the future projects in accordance with the worst-case scenario. In fact, all companies that deal in investment projects always plan for the worst-case scenario just in case,’ Chaschin noted.

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