Telecoms, Internet May Escape Curbs

BloombergReiman at the 2005 Russian Economic Forum. His ministry called for telecoms not to be declared a strategic sector.
In an apparent about-face, a State Duma committee on Tuesday signaled that it could exclude telecoms firms, Internet providers and small power distribution grids from a bill that would limit foreign participation in strategic sectors.

Martin Shakkum, head of the Construction and Land Policy Committee, said the bill on foreign caps in strategic industries might be amended Wednesday to remove regional electricity monopolies as well as telecoms and IT companies.

The sectors were on a list of 43 strategic industries in a bill slated for a crucial second reading on Friday.

The decision to cut the number of sectors on the list was made on Friday at a meeting in the office of Kremlin chief of staff Sergei Sobyanin, Vedomosti reported Tuesday, citing sources.

The paper also quoted Leonid Reiman, the IT and Communications Minister, as saying he had gained the support of President-elect Dmitry Medvedev in amending the list.

"We are very glad our arguments were supported by him," Reiman said, Vedomosti reported.

Reiman could not be reached for comment Tuesday.

Shakkum said Tuesday that his committee would revisit the bill Wednesday and make a detailed review of its provisions "because no final decisions were made yet on a permanent list of strategic industries. Tentatively, the Duma would consider the bill ... on Friday."

Since the bill passed its first reading in September, the number of strategic industries proposed for inclusion has swelled from 39 to 43, to include telecoms, fishing, printing and publishing companies. Some of those additions, such as Internet providers, the print media and the fishing industry, have raised concerns that the definition of strategic is being stretched too far.

Shakkum gave assurances Tuesday that a revision is imminent and that "Internet activities will be not governed by the law. Some natural monopolies will be also excluded such as regional monopolies in the telecoms and power and heating sectors," Shakkum said by telephone. "As to the radio and TV media, no caps are currently being considered."

Shakkum implied, however, that the printing and publishing industry, one of the latest additions, would remain.

"As to the print media, there will be some caps depending on the circulation. The higher the circulation, the higher the chances for a print [publication] to be affected by the law."

The strategic-sectors bill requires foreign investors to seek government approval for the purchase of a 25 percent to 50 percent stake in a company classified as strategic and a 5 percent to 10 percent stake in the mining and extraction industries.

Reiman's ministry said Tuesday that it would welcome telecoms companies and Internet providers being left out of the bill. "We have stated repeatedly that [such curbs] would hamper investment [and] cause stagnation in the industry," a spokesman for the ministry said .

Removing small power grids from the list would positively impact their development if and when the government decides to privatize them, analysts said.