KYIV, July 13 – The Ukrainian parliament passed a bill to privatize national telecoms monopoly Ukrtelekom that will give a strong, positive signal to lenders and investors, analysts said.
“It is a very positive sign as everybody waited for a long time for parliament to allow Ukrtelekom”s privatization,” said Ivan Kompan, head of the investment bank Wood and Company in Kiev.
“It can be a catalyst for the privatization process on the whole and for the stock market in Ukraine,” he added.
244 deputies supported the bill.
The plan envisages selling a 25 percent stake to a strategic investor at an auction open to domestic and foreign bidders. Other sales could be made, but the state would keep a 50 percent plus one share-controlling stake.
Ukrtelekom tops the list of key state assets which foreign lenders want privatized as soon as possible.
Valery Lytvytsky, senior adviser to the prime minister, told Reuters the sale of the company could be a strong positive signal to foreign investors who have so far bypassed Ukraine and would strengthen the country”s fiscal situation.
“Steps on privatizing liquid companies will have a positive impact on the fiscal situation…it will have social consequences – creating jobs and improving services,” he said.
Privatization is also one of the main conditions of a stalled $2.6 billion International Monetary Fund loan program which the government is desperate to get back on track.
Peter Woicke, executive vice president for the International Financial Corporation, the World Bank”s private sector arm, said on Wednesday the plan to sell only a 25 percent stake in Ukrtelekom might make it more difficult to find an investor, but he said the IFC was ready to step in with investments.
“The government here decided to go with quasi or part privatization, which probably makes it a little bit more difficult to find strategic investors. If we co-invest that might make it a bit more attractive for strategic investors,” he said.
The government, which wants to use proceeds from the sale to help pay off its crushing foreign debt obligations, plans to raise some $548 million from selling the 25 percent stake.
Ukrtelekom”s pre-tax profit rose to 716.6 million hryvnas ($132 million) in 1999 from 673.7 million hyrvnas in 1998.
The privatization bill will become law once signed by the president and published in the official media.
