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Articles & publications
13.05.2010
All profit to SvyazinvestVedomosti, Oleg Salmanov
Svyazinvest could leave its shareholders – the state and Comstar-UTS without dividends for the second time in a row. The holding’s management has proposed once again allocating profit to finance the upcoming merger process.
The Federal Property Management Agency, which controls 75% - 1 share in Svyazinvest, has taken an interest in the holding’s position concerning 2009 dividend payouts, the general director of Svyazinvest Evgeny Yurchenko told Vedomosti. A reply to the Federal Property Management Agency is forthcoming and boils down to a proposal not to pay out dividends, but instead to allocate all profit to finance the reorganization of the state holding, Yurchenko said. By April 2011, the holding’s seven regional telecommunications companies (RTOs) are to be folded into Rostelecom.
By law, dividends are to be paid out on the company’s RAS net profit, not taking into account the results of its subsidiaries. Svyazinvest has not yet published its official report for 2009, but said that the total amount of net profit generated by its subsidiary operators is equal to RUR 28.5 bln, of which 25% will go to dividends. Thus, Svyazinvest itself, which controls 51% of the common shares of RTOs and Rostelecom, could expect to see about RUR 2 bln.
The same amount was generated a year earlier. But the amount of the holding’s profit is also impacted by the revaluation of its stakes in RTOs and Rostelecom. In 2008 these stakes sustained heavy losses and the holding reported a net loss of RUR 120.5 bln. Svyazinvest posted a loss of RUR 2.83 bln in the first nine months of 2009, but in the fourth quarter the value of RTO shares rose sharply. Svyazinvest will close the year as a whole with net profit, Yurchenko promised, while declining to give the exact figure.
The company is entitled to pay dividends even if it posts a loss. But last year the state allowed Svyazinvest to allocate the dividend payouts of its subsidiaries to the reorganization. Specifically, payments were made for consulting services, a source at the holding points out. Contracts were signed with McKinsey, Ernst & Young, PricewaterhouseCoopers, Roland Berger and other companies.
And this year funds are also needed for investments. Whereas in crisis-ridden 2009 the group’s capital investments decreased by 53% to RUR 32.8 bln, this year Svyazinvest intends to ramp up investments by 43% to RUR 32.8 bln, Yurchenko told a panel of the Telecommunications Ministry yesterday.
In April 2010 Vice Prime Minister Igor Shuvalov proposed setting a dividend standard for state companies – about 25% of net profit. Many state companies failed to disburse dividends in 2009, but raised payments to management, he claimed. Sources at the Telecommunications Ministry, the Ministry of Economic Development (in charge of the Federal Property Management Agency) and AFK Sistema (owns 25% + 1 share in the holding through Comstar-UTS) declined to discuss Svyazinvest’s dividends.
Last year without dividends
The boards of directors of RTOs and Rostelecom approved recommendations on the amounts of dividends for the shareholders meeting which are scheduled to take place in June. The issue of the merger between RTOs and Rostelecom is also to be discussed at these meetings. If shareholders vote for the reorganization, these dividends would likely be the last for RTOs since the merger is to be wrapped up by May 2011.
Svyazinvest, holding company. Shareholders - Federal Property Management Agency (75% - 1 share), Comstar-UTS (25% + 1 share). Financial results (2009, aggregated RAS data): revenue – RUR 258.8 bln, net profit – RUR 28.5 bln.
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