State Property Fund seeking USD82m fine in court case over Ukrtelecom privatisation contract

19 May 2017

Interfax reports that Ukraine’s State Property Fund (SPF) has filed a claim in Kyiv’s business court against nationwide telco Ukrtelecom’s holding company ESU LLC and State Export-Import Bank of Ukraine (Ukreximbank) seeking to terminate the original 2011 privatisation agreement on the sale and purchase of Ukrtelecom, and collect a fine of UAH2.17 billion (USD82 million). The SPF says the claim is based on the non-implementation of conditions of the sale and purchase agreement signed between the fund and ESU in 2011, which stipulated certain details of the post-privatisation development of the national operator, which were intended to be completed before the company changed hands again, although Austrian investors sold Ukrtelecom’s controlling 92.8% stake to Ukrainian conglomerate SCM Group in 2013. Previous arguments have centred on a secure, separate government network which was supposed to be implemented by Ukrtelecom under the original contract, but apparently was never transferred to the state.

In December 2016 Ukrtelecom failed in its latest attempt to sell its mobile network division TriMob, after failing to receive permission from the necessary authorities; the deal was reportedly not in line with the 2011 privatisation contract (under a clause saying that Ukrtelecom should not sell any part of its business with a market value of more than 10% of its charter capital until all its post-privatisation development conditions in the contract have been met).

Ukraine, Ukrtelecom (incl. TriMob)