SvyazInvest Is Not Sold Yet But Already Purchased
// Sistema is ready to pay double price
Evgeny Novitsky, the second person in the stock federal company Sistema showed yesterday to Western investors the plans to acquire 75 percent of the stock of the holding company SvyazInvest. He said that Sistema appraises the state package of the holding stocks at $2.5-3 billion. However, Sistema will participate in the auction not by itself but together with Russian partners. Analysts think that when Novitsky mentioned partners he meant St. Petersburg communication companies. St. Petersburgers so far are not in a rush to create an alliance, reminding that neither terms nor conditions of the SvyazInvest sale was announced yet.
In the second day of the London forum (Kommersant page 14), Evgeny Novitsky, the chairman of the board of directors of Sistema presented a short investment memorandum concerning the purchase of the 75 percent of the stock of SvyazInvest that belongs to the state. The top managers of Sistema already said that the corporation intended to purchase this package in participate in this year’s auction. But they did not clarify the future of SvyazInvest.
Yesterday Novitsky announced that after finishing the deal with the state of purchasing SvyazInvest, Sistema intends to restructure the company. “That would allow it to increase its net worth like it was in Eastern Europe.” For instance, Novitsky explained to Kommersant, that the split of the holding company’s assets and selection of certain territorial operator companies is not planned. At the same time, Novitsky explained that SvyazInvest can help to get rid of “certain unprofitable assets for instance sanitariums and resorts.” He did not name the companies he plans to sell.
In the report in the forum, Novitsky named a price that Sistema intends to pay for the state package of stock of the holding company --$2.5-$3 billion. To purchase SvyazInvest, the corporation is planning to receive $1 billion in proceeds from the sale of Sistema shares. “Everything else we’ll borrow on the market,” said Novitsky. Besides, Sistema will participate in the auction not by itself. “Together with Russian partners from the telecommunications sector—the ones that we already work with,” Novitsky told RBK.
Analysts and market participants took Novitsky’s words not in one way. The thing is that the privatization project of SvyazInvest was only recently given to the government for examination. In other words, the terms of sale of the state stocks are not determined yet, as well as the time of the auction. Besides, it is already known that the state intends to privatize the telecommunication holding with “golden share,” meaning that it will keep the veto power for all key decisions. In this context, the announcement of Sistema’s head about the restructuring plan could seem a bit premature, as well as the other intentions. But Alexander Kazbegi, an analyst of the investment company Renaissance Capital, thinks that the named price of $2.5-3 billion is quite adequate for the 75 percent of stock. That despite the fact that less than a week ago Leonid Reyman, minister of Information Technologies and Communications, said that the price of 75 percent of SvyazInvest can be $1.2-$1.5 billion.
The experts drew more clearly the circle of the partners with whom Sistema can enter the auction. It can be Petersburg Group of Communication that has a holding company TelecomInvest as its main asset. “The market knows pretty well the Sistema projects with companies that have Petersburg roots,” said Evgeny Golosnoy from Troika Dialog. “We have to remember that also about Skylink as well as joint business within a company Interregional Transit Telecom. It would be logical to imagine that the two largest telecommunications groups in Russian would cooperate during the purchase of Svyaz Invest.”
TelecomInvest was not ready to talk yesterday about a strategic alliance with Sistema. “TelecomInvest showed earlier potential interest to the auction of SvyazInvest stocks,” Maxim Gorokhov, general director of TelecomInvest told Kommersant yesterday. “However, to talk about our participation in the auction before knowing its terms would be a bit premature. Also, it’s premature to talk about participation of TelecomInvest in any sort of alliances.”
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Sistema Purchases the stock of MTC
The federal stock company Sistema plans to buy out 10.15 percent of stock of cell phone company Mobile Telesystems (MTC) from Deutsche Telekom (DT). Vladimir Evtushnkov, president of Sistema, said in London yesterday. “We will buy it,” he said, answering the question. DT decided to sell MTC stocks because of the company’s intention to concentrate its activities on the markets of Europe and North America. Sistema, which already owns 50.4 percent of MTC stocks, signed an agreement earlier with a German concern stating that DT will not sell 10.15 percent of its shares until Aug. 15, 2005. The 10 percent shares of MTC will cost approximately $1.5 billion, according to the market prices. Analysts think the package can be sold with a discount of 15-20 percent. The discount is considered possible because the German company cannot place this package outside the stock market. The stock market did not react on the Sistema president’s announcement.
by Interfax
Valeri Kodachigov, Yegor Lokhmachev
All the Article in Russian as of Apr. 13, 2005
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