Bloomberg News

Comstar Declines After ‘Out of Place’ Valuation on Unit Stake

April 17, 2009

OAO Comstar United Telesystems, a phone and Internet company controlled by billionaire Vladimir Yevtushenkov, fell for a second day in London trading after reports of a below market valuation of its stake in OAO Svyazinvest.

The 25 percent plus one share stake that AFK Sistema’s Comstar unit owns in Russian telephone holding company Svyazinvest was valued at 23 billion rubles ($687 million) as of Dec. 31 by Ernst & Young LLP, Vedomosti reported, citing preliminary data from an unidentified person close to Svyazinvest.

“Ernst & Young’s valuation seems a bit out of place, as it is some 30 percent below the current market price of the stake,” Troika Dialog analysts Evgeny Golossnoy and Anna Lepetukhina in Moscow wrote in a note today. “It suggests that the process governing the restructuring of Svyazinvest remains subject to several factors seemingly divorced from normal business or economic logic.”

Officials at Ernst & Young, Sistema and Comstar declined to comment to Vedomosti.

Comstar shares fell as much as 37 cents, or 9.4 percent, to $3.58 and traded at $3.70 as of 12:25 p.m.

To contact the reporter on this story: William Mauldin in Moscow at;

To contact the editor responsible for this story: Gavin Serkin at

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