Long-discussed deal set to raise value of Ukrtelekom in advance of privatization; Ukraine must pay for shares, thought to be worth about $80 million, next year
by the end of next year, the State Communications Committee said on Thursday.
Paradoxically, the buyout of foreigners is actually part of Ukraine's attempt to attract more foreign investment, since the state will transfer the newly acquired stakes to telecoms monopoly Ukrtelekom, which the government plans to privatize.
"The corresponding agreements with all three shareholders were signed in Munich at the end of June," Oleh Shevchuk, head of the committee, told a news briefing of the purchases.
Utel was set up in 1992 by Ukraine's telecoms monopoly Ukrtelekom, U.S. AT&T Corp , Deutshche Telekom and Dutch KPN to give Ukraine its own international gateway.
Shevchuk said the government had agreed a payment scheme with foreign shareholders and hoped to pay for all the stakes by the end of next year.
"We will use part of Utel's profits to pay for the stakes … Under the most pessimistic scenario it will take a year and half," Shevchuk said.
He did not name a total price, though officials have previously said the government needed about $80 million to buy out the stakes.
Shevchuk said it would be easier for the government to privatize Ukretelekom now, since it could move Utel completely onto Ukrtelekom's balance, raising its value considerably.
The government plans to privatize Ukrtelekom early next year and some officials had said previously they hoped Deutsche Telekom which owns 19.5 percent in Utel would be one of the bidders.
The parliament has already approved a bill on privatizing Ukrtelekom in the first of three required readings and plans to debate the law in the second and final reading in autumn.
Shevchuk said Ukraine had already paid a first tranche worth $5 million to AT&T which hold 19.5 percent stake.
A domestic commercial bank Brokbusinessbank has purchased a 10 percent stake from KPN and the government will now buy out the stake from the bank, Shevchuk said. Local media reported Brokbusinessbank paid $15 million for the stake in Utel.
Utel's pre-tax profits fell by 18.6 million to $72 million in 1999 compared to 1998's levels.
