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Articles & publications
15.06.2010
State hands out telecom investments: transfer of another five state companies to Svyazinvest approvedKommersant, Inna Erokhina
Equity stakes in five telecommunications companies, including Central Telegraph 929%), Bashinformsvyaz (28.24%), and Ingushelektrosvyaz (100%), previously owned by the State Federal Property Management Agency are to be assigned to Svyazinvest. The Russian Prime Minister Vladimir Putin has already instructed the Telecommunications Ministry and the Ministry of Economic Development to prepare the required documents. After this, Svyazinvest itself will be folded into the merged Rostelecom.
The Telecommunications Minister Igor Schegolev has proposed the RF government to contribute the stakes owned by the State Federal Property Management Agency in Central Telegraph (29.0046%), MMTS-9 (50.67%), Bashinformsvyaz (28.24%), Chukotkasvyazinform (100%), and Ingushelektrosvyaz (100%), to the charter capital of Svyazinvest. This information was confirmed by the ministry’s press service. The head of the telecom ministry said the reason for this was that the existence of these operators as separate companies places restrictions on their development, access to financing and lays the foundation for corporate conflicts due to controversies over their development. The assumption here is that integrating the state’s stake in these assets into a single telecommunications holding will improve the level of their corporate governance and ultimately raise their value.
The document with Mr. Schegolev’s proposal contains a resolution “approved” the Prime Minister of the Russian government, Vladimir Putin. Instructions have been given to the Telecommunications Ministry and the Ministry of Economic Development. The proposed procedure will take at least a year to complete. In order for it to go through a presidential decree will be required to have these companies delisted as strategic enterprises, to have them included in the list of companies slated for privatization in 2010 (except for Central Telegraph, which is already included, the plan is for the stakes owned by the State Federal Property Management Agency to be put up for sale at tenders to be held on July 13), and for a government resolution to be signed. The final stage will be for Svyazinvest to conduct an additional issue, which will be used to pay for the stakes of these operators owned by the Russian on behalf of the State Federal Property Management Agency.
Svyazinvest consists of Rostelecom, seven regional telecommunications companies and Central Telegraph. A 75% - one share stake in the holding is owned by the State Federal Property Management Agency, while the rest is held by AFK Sistema through Comstar-UTS. The shareholders meeting at which this issue is to be examined will be held on July 12.
General Director of Svyazinvest Evgeny Yurchenko told Kommersant that the holding is generally supportive of this decision. “There is a strong chance that Svyazinvest could be folded into the merged Rostelecom at a later time”, he said. Head of public relations at Uralsib Bank (a minority shareholder of Bashinformsvyaz) Anzhela Gracheva declined to comment. North-West Financial Company (a minority shareholder of Central Telegraph) was unavailable for comments on Friday.
Leading analyst at Renaissance Capital Alex Kazbeghi believes that Central Telegraph and Bashinformsvyaz is the most valuable of the above-mentioned assets. Svyazinvest has never had a footprint in Bashkortostan, which means that this is a chance to enter a new market. Needless to say, doing business in this region involves fairly specific know-how, given the major influence of local authorities, as is the case in Tatarstan, and the holding could face difficulties in asset management. However, there is a precedent, that of Sistema, which purchased Bashneft and managed to move ahead”, he said. According to Mr. Kazbeghi, it makes no sense to leave these assets on the balance sheet of the State Federal Property Management Agency, since this agency has only a formal relation to their management.
What will be assigned to Svyazinvest
Central Telegraph is a provider of fixed-line telecommunications services (more than 40,000 subscribers), leases lines and offers Internet access in Moscow and the Moscow region (over 110,000 subscribers). The company’s largest shareholder is Svyazinvest (51%), State Federal Property Management Agency (29.0046%), and North-West Financial Company (8.44%). The company’s RTS capitalization on Friday was $100.4 mln.
Bashinformsvyaz is the largest telecommunications operator in the Republic of Bashkortostan. The company provides telephony, Internet access, IP and cable TV. The State Federal Property Management Agency holds 28.24%, Uralsib Bank has 17.84%, and the nominal holding of Depositary Clearing Company amounts to 33.28%. The company’s RTS capitalization on Friday stood at $126.2 mln.
Chukotkasvyazinform and Ingushelektrosvyaz are the largest telecommunications operators in the territories of these republics. They provide the following services: fixed-line, Internet, telegraph and line leasing. They are 100% state-owned.
Moscow DLD Telephone Exchange No. 9 (MMTS-9) is the largest interconnect point for the exchange of Internet traffic in Russia. The largest shareholders include the State Federal Property Management Agency (38%) and Rostelecom (36.84%).
In accordance with a presidential decree dated August 4, 2004 Chukotkasvyazinform, Ingushelektrosvyaz and MMTS-9 were placed on the list of strategic enterprises which aim to guarantee the state’s defense capability and security.
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