ATON-RBC

ATON investment company has raised its recommendation for RBC's shares from $12.9 to $14 per share. Recommendation to buy was left unchanged. The main reason for the recommendation upgrade was the deal with Mostelecom, whose networks will be used for the transmission of RBC TV's television signal. Mostelecom's network covers almost 100% of Moscow with its 3.3 million apartments. It could take two to three years to connect to the network. This transaction will drive RBC TV 's penetration level in Moscow from the current 17% to 100%, which will lead to a significant increase in RBC's advertising prices. The deal is expected to generate an additional $7 million in 2007, $13 million in 2008 and $15 million in 2009. The value of the TV channel will rise by 30 percent, and the company's total capitalization will increase by 9 percent, analysts say.

Konstantin Belov, an analyst at the Uralsib financial company (recommendation to buy, $9.3) thinks the management's plans to spin off IT business will have a positive effect on RBC. "Its core business is media and the Internet. In this market segment the company has more opportunities than in the IT industry. A more definite orientation will have a positive effect on them," he said. But Mr. Belov thinks the company's current value has already been priced in, and if it grows slower, the market could react with a sharp drop in the share prices. He also noted that "the terms of the deal with Mostelecom are unclear, which cannot be seen as positive."

This publication is for information only, and it cannot be interpreted as an invitation or solicitation to buy or sell stocks.