Ukraine’s richest man set to rule telecoms market as MTS holds back

21 Dec 2010

Ukraine has so far received a sole bid application for the privatisation of incumbent PSTN operator Ukrtelecom, a source at the State Property Fund (SPF) told Reuters this morning. The only bid, out of a line-up of six potential suitors previously identified by the SPF, is thought to have come from Ukrainian conglomerate System Capital Management (SCM), owner of Vega (formerly Farlep/Optima), which is the country’s largest private sector fixed line operator in terms of both subscribers and revenues according to TeleGeography’s GlobalComms Database. SCM is controlled by Ukraine’s richest man, Rinat Akhmetov, who in April 2009 upped his stake in the group from 90% to 100% by purchasing the remainder from his wife. SCM also owns 45.2% of Ukrainian mobile operator Astelit, and the purchase of Ukrtelecom would boost its standing in the cellular market as the national PTO is also Ukraine’s sole holder of 2100MHz 3G wireless spectrum.

The auction of the state’s 92.79% holding in Ukrtelecom is set to be launched on 28 December with a minimum bid price of UAH10.5 billion (USD1.3 billion), but according to the Reuters report the absence of competitive bids could delay the sale procedure. Russian conglomerate Sistema, owner of cellular group Mobile TeleSystems (MTS), had been widely regarded as the favourite to place a bid for Ukrtelecom, but MTS spokeswoman Yelena Kokhanovskaya confirmed to Reuters that the company had not yet bid as it found the asset to be ‘overpriced.’ According to Ukrainian laws, in the event of no competition the government must offer the stake to the only bidder, but only after an independent evaluation which will take at least 45 days. The SPF declined to comment on the issue, although it was due to hold a briefing on the issue later today.

Ukraine, Sistema, Ukrtelecom (incl. TriMob), Vega (owned by Vodafone Ukraine)