Analysts Say Sale of Telecom In Ukraine to Be Contentious

KIEV -- The forthcoming privatization of Ukraine's telecommunications industry will probably be a contentious affair lacking in transparency and openness for bidders, analysts said Friday.

The government is still divided on when to start the sell-off of the sector, which analysts describe as a potential gold mine for the struggling economy.

But Ukrainian Prime Minister Valery Pustovoitenko said this week Ukraine planned to set the ball rolling from Jan. 1, 1998 and that, judging by the experience of neighboring states, Ukraine could raise "over $2.5 billion" from the sale of its telecoms system.

Russia raised $1.9 billion from the July sale of a quarter of its telecom holding company Svyazinvest.

State-owned UkrTeleKom is Ukraine's telecom holding company which dominates the sector. It operates Ukraine's local, intercity and international telephone communication networks.

The company consists of 35 mainly regional firms and 738 local branches -- often serving small towns and even villages.

UkrTeleKom's other assets include a controlling stake in Ukrainian Mobile Communication, the leading mobile telephone network operator, where Deutsche Telecom AG, Tele Danmark AS and Koninklijke PTT Nederland NV, or Dutch PTT, also have shares.

UkrTeleKom also has 51 percent of shares in UTEL telephone company, where U.S.-based AT&T, Dutch PTT and Deutsche Telekom also have stakes. Analysts and parliamentarians were skeptical about the conditions of the future tender for UkrTeleKom's shares.