A government source said Wednesday that the government would sell its 23% voting stake in the Moscow fixed-line phone monopoly at a price higher than 490 rubles per share ($18.35) previously offered by Comstar United Telesystems telecoms holding.
MGTS is one of the largest fixed line operators in Russia, with installed capacity of about 4.4 million telephone numbers. The company's share of the Moscow fixed line telecoms market is about 80%.
The valuation documents have been submitted to the Federal Agency for the Management of Federal Property. The agency, the Information Technologies Ministry and the Economic Development and Trade Ministry will then make recommendations on selling the stake.
Earlier reports said the government was likely to allow state telecoms holding Svyazinvest to sell its minority stake in MGTS, if Comstar UTS announced a third bid. Comstar UTS, which holds 63.65% of MGTS common stock, has refused to comment.
"We are not commenting on a third tender yet," company spokeswoman Yulia Yasinovskaya said.
Comstar Director General Semyon Rabovsky previously said the company did not plan to launch a third tender for the stake, but added that the issue could be negotiated.
Comstar UTS has twice tendered to buy the stake. However, the Russian government failed to reach a decision on the sale before the deadline for the last tender on May 17.
On June 17, MGTS shareholders decided to pay no 2005 dividends, either for Ordinary or preferred shares. Under MGTS's charter, this move transformed Comstar UTS's preferred shares into voting shares, thereby reducing Svyazinvest's control from 28 to 23%.
The Information Technologies Ministry and the Economic Development and Trade Ministry have long pushed for selling the government's stake in MGTS over its falling liquidity, but fears that the move might devaluate Svyazinvest in view of upcoming privatization have suspended a government decision.
