Svyazinvest sale may have to wait until 2006

21 Jun 2005

Russia’s telecoms minister Leonid Reiman has told local reporters that the government’s plan to privatise Svyazinvest could now be put back to the first half of 2006. Whilst Reiman says that any delay would be due to time constraints on obtaining the required presidential sale decree, it is possible that his ministry has been listening to mounting criticism of how the sale is being run. Last month the state was mocked for attempting to rush through the sale before the end of the year, with Alfa Telecom amongst those 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 their current valuation.

Svyazinvest holds controlling stakes in all seven ‘mega-regional’ operators: Center Telecom, NorthWest 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