Alfa says Svyazinvest sale coming too soon to realise true value

17 May 2005

The head of Russian investment group Alfa Telecom has criticised the government’s plan to privatise Svyazinvest before the end of this year, saying the sale is coming too soon for the company to realise its true worth. Anatoly Protsenko, head of the telecoms arm of Alfa Group, told business daily Vedomosti that if Svyazinvest took the time to rearrange and maximise its businesses its assets could be worth ten-times the current valuation. ‘If Svyazinvest was better run and there was more effective management and control by the state, the capitalisation of the holding company might reach western standards,’ he told the paper. ‘Then the state’s revenue from privatising 75% of the shares would be more than USD30 billion.’

Svyazinvest holds controlling stakes in all seven ‘mega-regional’ operators: Center Telecom, North-West Telecom, Volga Telecom, South Telecom, Uralsvyazinform, Siberia Telecom (Sibirtelecom) and Far East Telecom (Dalnevostochnaya). It also has minority stakes in Moscow Local Telephone Network (MGTS), Svyaz Komi Republic, Ruslizinsvyaz and Kostroma GTS, as well as interest in the country’s national long-distance and international monopoly operator Rostelecom. The state plans to sell its entire 75%-minus one share holding in Svyazinvest and is considering selling off a number of its businesses separately; it hopes to raise around USD3 billion from the sale.

Russia, Svyazinvest