New government to restart Ukrtelecom sale, says minister

18 Jan 2008

Ukraine’s new government, led by recently elected prime minister Yulia Tymoshenko, has decided to try to sell 67% of state-run former fixed line monopoly Ukrtelekom, according to transport and communications minister Yosip Vinsky, speaking to journalists on Wednesday. A series of attempts to sell minority stakes in the telco failed last year, mainly due to a lack of interest, but exacerbated by legal problems. Because of delays in the Ukrtelekom and other planned sales, the previous government of Viktor Yanukovich fell a long way short of its 2007 privatisation target of USD2.1 billion, earning only USD475 million. ‘[The government] has decided on a list of privatisations, including Ukrtelekom – 67%,’ Vinsky said. Ukrtelecom estimated its 2007 fixed line revenues at UAH7.765 billion (USD1.55 billion), down from UAH7.879 billion in 2006. The incoming administration is hoping that regional and international interest in Ukrtelekom has been boosted by its re-launch in the domestic mobile market in November, particularly as it is the country’s sole UMTS 3G licensee and operator. Furthermore, the 67% stake mooted to be on offer is much larger than the 38% tranche earmarked in last year’s ill-fated sale attempt. However, no telecoms player has yet publicly announced its intention to buy the operator. Finance Minister Viktor Pynzenyk said the government would exceed a privatisation revenue target of USD1.6 billion in its 2008 budget. He added that all state sell-offs would be conducted via open auctions ‘to receive the maximum amount of revenues.’ Ukrtelecom is 92.778% state-owned. Stakes were privatised on privileged terms to employees (2.14%) and top management (5%) in 2002.

Ukraine, Ukrtelecom (incl. TriMob)