* Total Q3 revenues rise 2 pct to 77 bln roubles
* Net income up 8 pct yr/yr to 9.9 bln roubles
* Expected management shake-up to keep stock volatile
(Adds details, analyst comment, share price, background)
MOSCOW, Nov 21 Russian telecoms firm Rostelecom
, whose chief executive is embroiled in a fraud
investigation, posted a rise in quarterly sales on Wednesday as
new pay TV and broadband subscribers helped to offset a
declining fixed-line business.
Investigators searched the home of CEO Alexander Provotorov
on Tuesday in a probe that is not related to the
state-controlled firm, but which analysts expect to hasten a
long-expected management reshuffle.
Newspapers reported last month that Provotorov, who took the
helm at Rostelecom in July 2010, could be replaced by Vadim
Semyonov, the head of state telecoms holding company Svyazinvest
who studied law with Prime Minister Dmitry Medvedev.
Rostelecom, the former fixed-line monopoly, is emerging as a
universal telecoms provider after a major restructuring aimed at
catching up with growing demand f o r broadband and pay-TV and
adjusting to the shift towards mobile phones from fixed lines.
In the third quarter, its pay-TV revenues jumped 40 percent,
boosted by an increase in subscribers, while cloud and IT
solutions and renting channels to other operators were the other
two big drivers. Broadband revenues grew 9 percent, also helped
by more subscribers, Rostelecom said in a statement.
Mobile revenues rose 2 percent, which the company attributed
to its acquisition of Sky Link.
These growing segments offset declines in its local and
long-distance fixed-line business, helping total sales to reach
77 billion roubles from 75.25 billion a year ago.
Net profit climbed to 9.9 billion roubles ($316 million)
from 9.2 billion a year ago, due mainly to lower income tax
after the consolidation of the loss-making Sky Link.
"The results generally confirm the company's reasonably
strong fundamentals based on the data services growth potential.
However, the share price in the coming months will probably be
volatile, driven primarily by corporate events," Uralsib
analysts wrote in a note.
Rostelecom's shares were down 0.6 percent by 1010 GMT to
119.8 roubles, lagging the broad market index and valuing
the company at around $12 billion.
Following its acquisition of Sky Link, completed at the end
of July, Rostelecom said its closest mobile competitor Tele2
was the only big potential target, fuelling
speculations over a possible tie-up.
According to newspaper Vedomosti, Rostelecom and the Swedish
telecoms company - the fifth and fourth-biggest mobile operators
in Russia respectively - are discussing a merger that could hand
Tele2 control over combined mobile assets but give an option for
Rostelecom to buy out Tele2 over time.
Rostelecom had no comment on a possible merger with Tele2.
($1 = 31.2995 Russian roubles)
(Reporting by Maria Kiselyova; Editing by Lidia Kelly and Mark