Russian entrepreneur sole bidder for MegaCom

28 Sep 2017

The Fund for State Property Management under the Government of the Kyrgyz Republic (FGI) has disclosed that a Russian entrepreneur, Elena Nagornaya, submitted the sole bid in an ownership tender for state-owned mobile operator MegaCom, applications for which closed on 25 September. As reported by Kyrgyz news agency Tazabek, FGI deputy head Bakytbek Murataliev told a parliamentary session on 27 September that Ms Nagornaya had agreed to the minimum price of KGS14.45 billion (USD211 million) including a KGS945 million commission fee directly transferable to the state budget. Earlier, the FGI said that Nagornaya proposed to pay the full amount in instalments over five years, and also apparently agreed to take responsibility for potential future payments arising from pending lawsuits. Former MegaCom stake holding company Penwell (associated with businessman Gleb Ognyannikov) has made an international arbitration claim for USD200 million damages for ‘state expropriation’ in a case dating back to 2009.

The feasibility of the Russian citizen’s offer for MegaCom is under scrutiny, however, as Russian news sites claim that Nagornaya – with interests in the food, import/export, construction and energy sectors – has no notable track record in telecoms.

Three previous attempts to sell MegaCom (registered as Alfa Telecom) have failed. Bakytbek Murataliev told MPs yesterday that the state was determined to privatise MegaCom because of difficulties finding adequate funding in the government budget to invest in its networks – which had resulted in the cellco falling behind its private sector rivals in terms of technology/service development. The official stated: ‘MegaCom can no longer compete under the law on public procurement. It does not invest in itself and, in addition, the revenue from voice communication is falling all over the world. The new investor should transform it into an internet company, that is, they need large investments in order to work well in the future.’

Kyrgyzstan, MegaCom (Kyrgyzstan)