OREANDA-NEWS. April 15, 2010. Russian courts have approved agreements extending the deadline for three Skylink subsidiaries to comply with the terms of their GSM licenses. The subsidiaries -- in Altai, Vladimir, and Kaluga -- now have until late-December 2010 to build the requisite number of base stations, which under the original terms of the licenses should have been completed by December 2009, reported the press-centre of OTKRITIE FC.

View: Several more of Skylink's GSM licenses remain at risk of being revoked due to insufficient base stations, although we expect the company to continue making progress with regulators in negotiating extensions. Svyazinvest plans to borrow RUB4bn for the development of Skylink's network, although the continuing delays in the transfer of ownership of Skylink from Sistema to Svyazinvest (see related Rostelcom story) may make it more difficult for them to maintain the licenses, which are Skylink's most valuable assets. The three regions in question have a combined population of 5 million, which represents approximately 10% of the population coverage Rostelecom hopes that Skylink provides. 

Valuation: The consolidated Rostelecom trades on a 2010 EV/EBITDA of 4.9x. 

Action: The impact on Rostelecom is negligible given the relatively small size of Skylink, so we do not expect a market reaction.