Kyiv Economic Court has ruled that Ukraine’s monopoly fixed-phone operator Ukrtelecom is to be returned to state ownership because its investor failed to meet privatization commitments.

On Oct. 19, the court decided to nullify the privatization contract between State Property Fund and Ukrtelecom’s buyer, ESU. Almost 93 percent of ESU’s shares belong to SCM, the holding company of Ukrainian oligarch Rinat Akhmetov.

According to the decision, Akhmetov’s ESU will have to return all of Ukrtelecom’s ownership rights to the state and pay a fine of $82 million for failing to fulfill its privatization contract obligations. According to the sales agreement, ESU was to invest $450 million into building up Ukrtelecom’s network over five years.

“Ukrtelecom also failed to comply with a direct condition of the contract – to transfer special-purpose telecommunication networks to the state’s property,” said Vitalii Trubarov, the acting head of State Property Fund.


ESU said it disagreed with the court ruling and plans to appeal.

“Taking into account the nature of claims from the State Property Fund and their connection to the actions of Ukrtelecom’s previous owners, ESU believes it is necessary to reach a reasonable compromise on the implementation of privatization obligations,” Ukrtelecom said in a statement on Oct. 19.

The operator also said it was continuing to operate as normal.

Questions over Ukrtelecom’s privatization started to be raised at the beginning of this year.

According to a State Property Fund investigation published in February, ESU failed to meet its obligations as foreseen in the privatization contract. In May, the SPF filed an application to return the operator to state ownership.

Ukrtelecom issue is also being investigated by Prosecutor General’s Office of Ukraine. At the request of the PGO, Kyiv Pechersk Court even issued an order to arrest operator’s shares.

The Kyiv Post’s IT coverage is sponsored by Ciklum. The content is independent of the donors.

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