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Articles & publications
05.07.2010
Schegolev to replace Reiman againVedomosti
Timofei Dzyadko
A reshuffle could be in the offing at the board of directors of Svyazinvest, the first time in 10 year. In place of the former telecom minister and currently presidential advisor Leonid Reiman, the current head of the telecommunications ministry Igor Schegolev, could get the nod.
The State Federal Property Management Agency (Roscomimushestvo) has approved the draft government directive of Svyazinvest, a ministry source reported to Vedomosti. The chairman will be elected at the first meeting of the new board, which the shareholders of Svyazinvest will elect on July 12. According to the source, the draft directive has already been forwarded to the Ministry of Economic Development. A manager at the holding and a state official are also aware that Schegolev is to be named Chairman of the Board of Directors.
Over the past 10 years the Board of Directors of Svyazinvest has been headed by Leonid Reiman, who headed up the Telecommunications Ministry in 1999-2008, and has served as presidential advisor since May 2008. During this time, Svyazinvest executed the merger of 80 regional telecom entities, which were folded into 7 regional telecommunications operators (RTOs), and the aggregate revenue of the operators controlled by the holding skyrocketed from RUR 72.4 bln (2000) to RUR 249.1 bln (2008). Admittedly, the holding’s market share has declined three-fold over the past eight years, the Russian Vice Prime Minister Sergey Ivanov noted last year. During Reiman’s tenure many mobile assets were sold off and the gigantic deals to purchase Oracle and Amdocs products (for $153 mln and $480 mln, respectively), which riled minority shareholders, took place.
In 2008, Reiman yielded his position to telecom minister Igor Schegolev, but retained his post on the Board of Directors of Svyazinvest. The board chairman’s position remained vacant for nearly a year, but then was again taken by Reiman. This move was at odds with a tacit agreement – that Schegolev would not be appointed to the board, and Reiman would retain his seat, but not as chairman, according to a source close to the board. Reiman was backed as a member of the new board, but it would be logical for the current, not former, telecom minister to head up the board, Vedomosti’s source went on to say.
According to Svyazinvest’s charter, the main duties of the head of the board of directors include organizing the work of this managing body and drawing up agendas. If the board’s members vote equally, the chairman is supposed to cast the deciding vote. However, on all key issues (management reshuffle, large transactions, etc.) all members of the board, which are appointed by the state, including Reiman, vote in line with governmental directives.
In the current lineup of the board of directors of Svyazinvest, state nominees hold seven out of nine seats, while the other two go to the appointees of Comstar-UTS, which holds a 25% + 1 share stake in the state holding. Comstar has also named its appointees to the board of directors, but soon after its election (according to the terms of the agreement, by August 2) Comstar should sell its equity stake in Svyazinvest to its subsidiary Rostelecom, after which Svyazinvest’s board could be reelected again.
The representative of the Telecommunications Ministry declined to comment on whether Schegolev could be elected as chairman of the board of directors of Svyazinvest and would not elaborate on the goals the telecom minister would like to pursue in this capacity.
In time, the importance of the board of directors of Svyazinvest should decline. The restructuring of the state holding should be completed by the end of February 2011, with seven RTOs and Dagsvyazinform being folded into Rostelecom, while subsequently the state holding could be wound up altogether, the general director of Svyazinvest Evgeny Yurchenko told Vedomosti in a June interview.
Rieman’s representative is unaware of a forthcoming directive. Head of the public relations department of the State Federal Property Management Agency Tatyana Zubanova and a spokesman of the Telecommunications Ministry declined to comment, and a representative of the Telecommunications Ministry Svetlana Glikman left Vedomosti’s query unanswered.
What the board of directors does
Under the charter of Svyazinvest, its board of directors determines the top-priority areas of operation carried out by the holding, approves the agenda for shareholders meetings, appoints and dismisses all members of the board (including the general director), determines the amount of their salaries, and approves major transactions which concern the management of the holding. In addition, the board of directors forms the position of Svyazinvest’s nominees at the board meetings of its subsidiaries, based on which the appointees vote on such issues as additional share issues, the sale of shares, the reorganization and liquidation of these companies. The shareholders of Svyazinvest examine issues pertaining to reorganization, large transactions, etc. only upon application from the board of directors.
Svyazinvest, holding company. Controls seven regional fixed-line telecommunications operator and LD operator Rostelecom, and has a 23.3% stake in MGTS. Shareholders – the State Federal Property Management Agency (75% - 1 share), Comstar-UTS (25% + 1 share). The aggregate value of the holding’s assets on MICEX – RUR 154.33 bln. Financial indicators (aggregated RAS data, 2009): revenue – RUR 258.8 bln, net profit – RUR 28.5 bln.
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