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We believe the appreciation in OJSC Rostelecom’s (Rostelecom) common stock is due to robust operating performance reported by the company in its 1H 08 IFRS based results. However we maintain our negative outlook towards the company as Rostelecom has been consistently losing its DLD/ILD market share dominance to competitors. In addition, increasing VoIP telephony services and Fixed-to-Mobile (FTM) migration are further expected…

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Although revenues were in line with our estimates, margins were below our expectations, mainly due to higher than expected operating expenses and lower than expected other gains, as a percentage of revenues in 9M 08. In light of this, we are likely to revise our estimates and target price downwards in our next update report. As a result, although the target price supports a BUY rating at current levels, we maintain our SELL rating in…

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OJSC Rostelecom’s (Rostelecom) common stock achieved our target price on 18 September 2008, as the stock declined in line with our fundamental outlook and weakness in global equity markets. Going forward, we are cautious of future revenue growth given increasing competition in its core businesses, and expect the company to focus on its non-core revenues....