A draft of an executive order scratching the holding company off the list of the country's strategic assets has been approved by the Interior Ministry and shall be resubmitted to the government for consideration as early as next week, Economic Development and Trade Minister German Gref said Thursday.
Once issued, the decree will remove the main obstacle for Svyazinvest's privatization - the cap on selling more than 25% of the company's stock. "This is a substantial step towards privatizing the company, though it does not mean that it will be privatized this year," a ministry spokesperson said.
The agreement must win the approval of Svyazinvest's minority stockholders. However, experts say there are not many conditions the uniformed services could attach to the privatization deal.
"The guarantee of uninterrupted access to communications services after privatization should be granted to the so-called "special consumers", namely the Defense Ministry, the Federal Security Service, the Interior Ministry, the Emergencies Ministry, the Federal Guard Service and the Justice Ministry, even if they drag their feet on paying for the services rendered," said Alexei Yakovitsky of United Financial Group. If Svyazinvest is privatized, its new owner might terminate the uniformed services' access for payment arrears, which they hope to avoid, he said.
According to Svyazinvest, the uniformed services owed more than 600 million rubles, or $21 million, as of July 1, 2005. Alexander Kazbegi, an analyst with Renaissance Capital, presumes that there will be no above-the-board competition in privatizing Svyazinvest, "i.e. there will be more lucky buyers from the outset."
Experts say the agreement with the Interior Ministry will enable the government to announce Svyazinvest privatization terms as early as this fall.
