Ukrtelecom sale scaled down

9 Mar 2007

The long-delayed plan for the sale of a minority stake in Ukraine’s incumbent telco Ukrtelecom is expected to be announced by the country’s State Property Fund on 28 March. However, according to local press reports, the first phase of privatisation will involve the offer of five separate 1% stakes, far short of the 40%-plus stake previously mooted. The sales are likely to be completed in May, although no official details have been released regarding whether the stakes will be offered publicly or privately nor any other terms or pricing information. TeleGeography’s GlobalComms database notes that Ukrtelecom is one of the last remaining state-owned incumbents in central and eastern Europe, with its attempts at privatisation having suffered years of political delays. In January President Viktor Yushchenko finally signed a bill paving the way for a sale of shares in the telco – which was expected to take the form of an initial public offer of 10% on the domestic stock exchange in the first quarter of 2007, with a further 32.86% to be sold later in the year, to leave the government with 50% plus one ‘golden’ controlling share. State opinion is divided regarding whether to invite bids from strategic investors to take on a management role. Russian telco Comstar UTS, part of the Sistema Group, has declared its interest in acquiring a stake in the former monopoly, whilst the only domestic strategic bid is likely to come from System Capital Management (SCM) Group, parent of the country’s second largest fixed line operator Optima/Farlep and co-owner of cellco Astelit. Outside of these two, there has been no confirmed interest shown by major telcos in Ukrtelecom, which remains 92.86% state-owned. The remainder is held by its management (5%) and employees (2.14%).