With the sale of a 13% share at privileged prices starting on October 1, the first stage in the sell- off of the Ukrtelekom Joint Stock Company has begun. Ukrtelekom plans to sell 2.08% of privileged stock to employees, 5.919% to other buyers entitled to acquire stock at favorable prices, and 5% to company management. The sale will earn Ukrtelekom UAH 160 million, with 60% of the sum payable to the budget, 30% spent on modernization and economic development of communications networks, and 10% earmarked for the Defense Ministry.
As of October 1, 700 offices all over Ukraine will start accepting applications for Ukrtelekom stock. The offices will operate for two months till December 1, 2001 to enable over 200,000 Ukrainians, former and present Ukrtelekom employees, to buy stock at half its nominal value. Under the stock subscription procedure, each applicant is entitled to a packet of 3,060 shares worth about UAH 382.50. It is expected that not all the low cost shares will be bought due to the high degree of migration among Ukrtelekom pensioners. State Committee for Communications and Information Chairman Stanislav Dovhy confirmed that the remainder of unsold stock will be put up for sale on international stock exchanges, enabling the company to monitor the pricing of its stock.
With the 50%+1 share package retained as state property, the tender sale of Ukrtelekom’s main 37% stake seems to be the issue for a distant future. According to Mr. Dovhy, the successful sale of Ukrtelekom, the largest strategic item in Ukraine’s privatization program, is contingent on how balanced the preparation will be. He said that a number of domestic and foreign factors are to be taken into account, specifically pointing to the current situation on world markets of telecommunications, with the leading telecom companies investing large sums in buying licenses for third generation equipment. “The timing of the tender is of utmost importance,” Dovhy stressed, citing the examples of other countries where the privatization of communications companies took up to ten years. Apart from monitoring foreign markets and working with potential investors, efforts should be taken to raise Ukrtelekom’s investment attractiveness, Dovhy stated. Part of this program will be the installation in 2002 of 450,000 telephone lines, twice as many as last year, he said.
The sale of Ukrtelekom’s 51% stake in UMC remains an open ended question so far. Mr. Dovhy explains such uncertainty by the lack of consensus among UMC shareholders, Germany’s Deutsche Telekom, Denmark’s TeleDANMARK International, and Holland’s KPN. Meanwhile, the commission for privatization chaired by the prime minister has already considered three possible options: not to sell UMC stock, to sell the whole package, or to sell a 25% interest. However, the commission has not made any final decision.
