State Property Fund unlikely to back Ukrtelecom re-nationalisation

7 Oct 2016

Ukraine’s State Property Fund (SPF) looks likely to oppose political efforts to re-nationalise the country’s dominant fixed network operator Ukrtelecom, judging by disclosures from the agency reported by the local media. Ukrtelecom is controlled by the SCM Group conglomerate, itself wholly owned by Ukraine’s richest man Rinat Akhmetov, whose power base is in the industrial Russian-influenced east of the country, and a parliamentary special commission for privatisation headed by MP Boris Filatov has urged the government to take measures to return Ukrtelecom’s ownership to the state with the aim of re-privatising the company to another bidder. In its latest tactic to try and get the previous ownership transaction annulled, the special commission requested that the SPF conduct an internal investigation concerning compliance with current legislation by its officials during the sale of Ukrtelecom. The head of the SPF, Igor Bilous, has said however that he considers it inappropriate for the state to effectively seize SCM’s shares in Ukrtelecom, as this would require the return of more than UAH10 billion (USD382 million) to SCM, funds which are not available in the budget, whilst there is no known potential private sector buyer waiting in the wings, BizLiga writes.

At a meeting on 5 October the government postponed the consideration of a draft resolution to create an interdepartmental working group which would coordinate central authorities and law enforcement agencies in analysing the conditions of sale in Ukrtelecom’s previous ownership change; the draft is also aimed at resolving problems regarding the possible return of the controlling stake in the telco. The results of SPF’s own internal investigations into the sale require processing by the mooted interdepartmental working group before the government could make a decision on the matter. In a previous report the SPF concluded that the conditions of sale at Ukrtelecom had been met and that there were no violations of contractual terms.

Ukraine, Ukrtelecom (incl. TriMob)