Government leaves Ukrtelecom off privatisation list

18 Feb 2005

Ukraine’s Prime Minister, Anatoly Kinakh, has confirmed that the country’s new ‘post-revolution’ government will not privatise state-owned telco Ukrtelecom this year, despite plans from the previous administration to do so. The sale was expected to give the PTO a much needed financial injection as it looks to ward off competition from alternative fixed line operators and mobile players in an increasingly competitive market. However, the incoming administration has back-tracked on earlier proposals to divest part or all of its 92.86% interest, leaving Ukrtelecom without crucial funding for modernisation projects and, perhaps more importantly, even more exposed to further price erosion of its core fixed line voice revenues. The company is struggling with cashflow and reported slow revenue growth of just 7% in Q3 2004. Moreover, despite stable profits in 2004, it is finding it hard to contain rising costs.