Wednesday, October 26, 2005

Yushchenko: UkrTelekom Should Probably be Next Privatization

KIEV, Ukraine -- UkrTelekom, the national phone company, should probably be the next in the list of state-owned assets that will be sold to investors, President Viktor Yushchenko said Tuesday.


UkrTelekom, which operates local and long-distance and international telephony, has been losing its market share due to the booming cell phone markets, Yushchenko said explaining why the assets must be sold fast.

“There is a list of strategic companies whose privatization is a pressing matter,” Yushchenko said. “I would start this list with UkrTelekom.”

Prime Minister Yuriy Yekhanurov said Tuesday his government has been already looking into ways of privatizing UkrTelekom, but refused to provide any details.

The comments may provide clues to investors and analysts that are speculating which assets will Ukraine sell next following the successful privatization of steel giant Kryvorizhstal.

Mittal Steel, the world’s biggest steelmaker, agreed Monday to pay $4.79 bln for 93% stake in Kryvorizhstal, Ukraine’s largest acquisition deal ever, exceeding the government’s original price expectation of $3 billion.

“The modernization that has taken place on [telecommunications] market day after day is narrowing room for maneuver by UkrTelekom,” Yushchenko said. “Unless we conduct privatization fast and effectively, we’ll be losing potential that could bring financial benefits.”

Ukraine’s telecommunications market has been increasingly turning mobile and dominated by two cell phone operators, UMC, owned by MTS of Russia, and Kyivstar, majority owned by Telenor of Norway.

Considering attractiveness of the cell phone segment, the government has been considering allocation of a cell phone license to UkrTelekom before to increase its value before the privatization.

The government owns 92.8% stake in UkrTelekom, while the privatization of 42.8% stake has been repeatedly debated and delayed for almost a decade.

Last time the government planned to sell the stake was in August 2004, but the privatization had been delayed to prevent any fraud and manipulation ahead of the last year’s presidential election.

Source: Ukrainian Journal

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