Ukraine's Parliament Approves Long-Awaited Privatization Of Telecom Giant Ukrtelekom

KIEV, Ukraine -- Ukraine's parliament on Wednesday approved the long-awaited privatization of the country's largest telecommunications company, which officials hope will repeat last year's highly profitable sale of a flagship steel mill.

The 450-seat parliament approved the sale in a 226-6 vote, with many lawmakers not voting in protest.

The privatization of telecoms monopoly Ukrtelekom, in which the government currently holds a 92.86 percent stake, has been repeatedly postponed. But both President Viktor Yushchenko and Prime Minister Viktor Yanukovych support selling shares next year.

After the profitable sale of Kryvorizhstal last year, the government hopes to repeat the success by selling Ukrtelekom at a similarly open, public auction.

This year, the Transport and Communications Industry predicted that a 50 percent stake in Ukrtelekom could go for between US$3 billion-US$4 billion (€2.5 billion-€3.3 billion) in an auction.

But analyst Vadym Karasyov predicted that Ukrtelecom would fetch far less, only about 4 billion hryvna (US$790 million, €630 million).

He said foreign investors would probably not be as interested because of Ukraine's current political instability and predicted the government would try to keep the price low to favor Ukrainian investors.

"The right moment to sell Ukrtelecom was missed. It is unlikely that the government will manage to repeat the success of the Kryvorizhstal sale now ," said Karasyov, head of the Kiev-based Institute on Global Strategies. He said much of Ukrtelecom's equipment is outdated, making the telecoms giant not as attractive to investors.

Yushchenko's ally, lawmaker Borys Bespaliy, agreed, noting that "the price of the giant does not increase as time passes." He also expressed concern over how Yanukovych's government would conduct the sale.

Kryvorizhstal was snapped up by Mittal Steel last year for 24.2 billion hryvnas (US$4.8 billion, €4.1 billion) in Ukraine's biggest and most profitable privatization auction ever.

The price was nearly six times what it initially was sold for under former president Leonid Kuchma and Premier Yanukovych in a deal later canceled as illegal. The buyers had been Kuchma's son-in-law and a magnate close to Yanukovych.

Source: AP