Epic move: Austrian sole bidder for Ukrtelecom; no SCM bid; MTS waits in wings?

22 Dec 2010

The chairman of Ukraine’s State Property Fund (SPF), Alexander Ryabchenko, has announced that only one bid has been received for a 92.79% stake in government-owned incumbent telco Ukrtelecom, from Epic Services Ukraine (Esu), a subsidiary of Austrian investment fund Epic. As reported by local newspaper Delo.ua, the applicant has already made a tender guarantee of UAH1.05 billion (USD133 million) in advance of a privatisation auction set for 28 December, with a minimum bid price of UAH10.5 billion. Prior to the announcement it had been widely thought that a bid would come from domestic conglomerate SCM, owner of the country’s largest alternative fixed line provider Vega and part-owner of local cellco Astelit, but the Ukrainian group has not yet come forward, whilst the previous favourite for the stake, Russia’s MTS, part of the Sistema group, has declined to bid because it considers the return on investment will be too low. An MTS spokesperson added that it would bid no higher than UAH8 billion. As reported yesterday by CommsUpdate, in the event of a sole bidder, the SPF will still offer the stake, but only after an independent evaluation which will take at least 45 days.

The Delo.ua report quotes speculation from experts, including Alexander Cooper, former head of the SPF, that Epic could act as an intermediary in the interests of a third party, which could be MTS, in an attempt to bring down the price. However, presenting a potential obstacle for this scenario, Ryabchenko said the stake in Ukrtelecom may not be subsequently resold without the consent of the SPF until such time as the buyer meets all investment obligations.

Austrian privately held investment banking firm Epic has offices in 18 countries and participates in the telecoms, pharmaceuticals and energy markets. In the Ukrainian market, the company has acted as financial advisor to Utel, the 3G mobile division of Ukrtelecom, as well as advising on various mergers and acquisitions. Until late 2006, Epic was a major shareholder of the Ukrainian company Quinto, engaged in asset management and public investment funds. Epic’s locally registered subsidiary Esu (formerly RBScom) is a contractor used by mobile operators in deploying networks, with five offices across Ukraine.

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