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Deputy PM: russian government to try to sell Rostelecom in 2014

January 16, 2014, 22:45 UTC+3 MOSCOW
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MOSCOW, January 16, /ITAR-TASS/. The Russian government will do its best to sell the country’s leading telecom operator Rostelecom this year, Deputy Prime Minister Arkady Dvorkovich said on Thursday, January 16.

“According to the plans concerning the strategy of the united company, its value should grow considerably during a certain period of time. The consultant should say when this may happen -- this year, when the potential of this value has not been fully tapped yet, or some time later when everyone sees how these plans get implemented,” Dvorkovich told journalists after a government meeting.

He expressed confidence that the structure of the joint venture created by Rostelecom and Tele2 will raise Rostelecom’s value, even with a minority stake.

Dvorkovich confirmed that “Rostelecom is in our three-year privatisation programme.” “We will work by the schedule that will allow us to privatise it this year,” he said, adding that a one-year delay until 2015 would not be critical.

“It is important that it [the privatisation] be not put off for far too long,” the deputy prime minister said.

The Head of the Agency for the Management of Federal Property (Rosimushchestvo), Olga Dergunova, said earlier that the decision on how to privatise Rostelecom might be made no earlier than the middle of spring.

“At the end of December we just opened the envelopes [with bids]. So the first news should not be expected before financial statements are released, which is April,” Dergunova said.

Technical issues will be worked on and data gathered from January to April, she added.

Dergunova told ITAR-TASS that the privatisation of Rostelecom was scheduled for 2014. “The plan for 2014 includes the privatisation of Rostelecom - the sale of the 50 percent stake and full withdrawal of the State,” she said.

The shortlist of candidates for organising the sale of state-owned shares in Rostelecom includes Deutsche Bank, the Russian branch of Goldman Sachs, and Sberbank KIB.

Minister of Economic Development Alexei Ulyukayev did not rule out possible participation of foreign investors in the Rostelecom privatisation process.

Minister of Mass Communications Nikolai Nikiforov said that Rostelecom was mentioned in the privatisation programme but no concrete date was fixed for selling it. “We think that privatisation is the right strategic path to follow, but there should be no hasty decisions,” he said.

Asked about the participation of foreign investors in Rostelecom privatisation, Nikiforov said that “a part of the company’s shares is already trading on the exchange” and “as a result of a just-concluded transaction, the Russian Direct Investment Fund and Deutsche Bank bought into the company’s equity capital.”

“This is a very good example of strategic investment,” the minister concluded.

In August of 2013, Rostelecom asked the government to postpone the privatisation of the company from 2014 until 2016.

The company’s management believes that “conditions for successful privatisation will be created by 2015-2016” and this “will maximise budget revenues from the privatisation of the company and ensure the interests of the state in terms of both special communication services and implementation of state programmes.”

By that time the company hopes to increase capitalisation and make its operations more effective by developing mobile and new services.

“The company has a considerable potential for boosting its value, which can realistically be tapped in the medium term. The company is correcting its strategy and investment plan, it is planning to cut costs and has overhauled its procurement system. We are seeking to raise Rostelecom’s market value,” the company said.

Currently, the government controls about 53 percent of Rostelecom shares through Svyazinvest, the Federal Property Fund and Vnesheconombank.

The communications minister said that Rostelecom’s merger with Svyazinvest should be completed in 2014.

Rostelecom is Russia’s largest national telecommunications operator with presence in all Russian regions. The Group is a universal operator and undisputable leader of broadband and pay-TV markets in Russia with over 9 million fixed-line broadband subscribers and over 6 million pay-TV subscribers. As Rostelecom develops its mobile data networks, its position as a major mobile operator is growing with over 13 million currently subscribed to Rostelecom’s mobile voice services. The Company currently has approximately 28 million local fixed-line voice subscribers and it is the leader in the corporate and government services segment. The Group is also an important innovator that provides solutions in the field of medicine, E-Government, cloud computing and education.

Rostelecom was assigned a ‘BBB-‘ and ‘BB+’ international credit ratings by Fitch Ratings and Standard & Poor’s respectively, both with a ‘Stable’ outlook. The Group generated 321 billion roubles of consolidated revenues and 34.5 billion roubles of net income in 2012.

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