Ukrtelecom is the state-run operator covering around 80 percent of the fixed communication market in Ukraine. The company has around 9 million subscribers. Its turnover reached $866.45 million in the first nine months of the past year. The Ukrainian government was willing to sell 42.86 percent in Ukrtelecom to private investors in the fall of 2004.

Ukrtelecom spokesmen told Kommersant they have long been waiting for the statement made by Chervonenko. Around three years ago, Ukrtelecom sold its stocks to UMS (Ukrainian operator of Russian MTS). The agreement entered into between the Ukrainian government and MTS at that time deprived Ukrtelecom of the right to set up a new cellular division within the following three years. Now that term has nearly expired. Ukrtelecom briefer Mariana Litvinenko told Kommersant UMTS had applied for the cellular license, third generation, as far back as in November of 2003. No official answer has been received to-date, Ukrtelecom spokesmen said.

“Once the government of Ukraine sold UMS to Russian MTS, it has been facing hurdles in its quest for Ukrtelecom buyers,” UFG analyst Alexey Yakovitsky specified. “With the license granted, the worth of the state-run operator of fixed communication may increase,” Yakovitsky noted. The difficulty is that “by the time when the license is issued, the level of penetration on the cellular market of Ukraine will exceed 50 percent and the operators’ revenues will be low.” Today's penetration equals 35.1 percent, according to the data provided by the government’s department for communication and informatization.

When appraising the future of the Ukrtelecom cellular project, the analysts point to today’s political situation in Ukraine. No one seems to count on the soon privatization of the company, therefore, it won’t be easy to find an investor. “Ukrtelecom privatization has been clearly shelved. The Government of Ukraine made it clear that around 40 percent of privatization deals would be reconsidered,” said Alexander Kazbegy from Renaissance Capital. “The probability that the government will start taking away assets and, at the same time, make private anything is negligibly small,” Kazbegy explained.

© "Kommersant"