Svyazinvest privatization to go ahead early 2005 or late 2006: minister

Russia's communications minister said Tuesday that the privatization of a 75 percent minus one share stake in the country's main telecommunications holding Svyazinvest could go ahead at the end of this year or the start of 2006.

Meanwhile, the chief executive of Russia's Sistema corporation said it was willing to bid as much as US$3 billion for the stake.

"A public auction is planned for the end of 2005 or early 2006," Communications and Information Technology Minister Leonid Reiman was reported by Interfax as saying at the Russian Economic Forum in London.

Last week a draft presidential decree on the hotly anticipated privatization was submitted to the government. Once the decree has been approved by the government, it will be sent to President Vladimir Putin for signing.

Svyazinvest, which has controlling stakes in 7 regional telecom companies, as well as the national long-distance operator Rostelekom, reported revenues of 131 billion rubles (US$4.7 billion) in 2004. It has been unclear when the government would move ahead with privatizing such a strategic concern.

The government has said it will retain a so-called golden share in the company, or the right to veto undesired merger and acquisition activities.

Sistema CEO Yevgeny Novitsky said that US$2.5 billion to US$3 billion was a "fair price for the state-owned stake in Svyazinvest."

"We are ready to pay it," Interfax reported him as saying in London.

Novitsky said US$1 billion of a potential bid would come from money raised from its initial public offering on the London Stock Exchange in February, while it would borrow the rest.

Sistema, which is 65 percent owned by tycoon Vladimir Yevtushenkov, owns 50.4 percent of No. 1 Russian mobile operator MTS and has interests in real estate and banking. Alfa Group, the owner of rival Vimpelcom, which is the second-biggest mobile operator in Russia, is also expected to participate in the auction.

Associated Press