Svyazinvest Sale Likely To Be Split

The Russian government is putting the finishing touches on a blockbuster privatization deal for the country's phone system and is leaning toward selling it off in several chunks rather than one huge stake, a State Property Committee official said Thursday.

Vladimir Boiko, head of the committee's communications industry department, said he knew of no closing date fixed for the tender, contradicting media reports last month that bids would have to be submitted by Jan. 15.

"There is a general agreement on conditions of the sale, and now we're talking about making final touches, like determining how the proceeds of the selloff will be distributed," Boiko said in an interview.

Foreign investors will be eligible to participate in the auction for the 25-percent stake in Svyazinvest, the country's telecommunications holding company, Boiko said. Analysts have said the stake, to be fused with the government's controlling interest in long-distance operator Rostelecom, could fetch $1.2 billion to $1.5 billion.

The government wants to sell Svyazinvest shares in several small chunks rather than one block, Boiko said, because of the difficulty of finding a single deep-pocketed investor.

Boiko said Communications Minister Vladimir Bulgak has approved the Rostelecom transfer and a relevant decree is believed to be awaiting a signature by President Boris Yeltsin.

A Western consortium drafting terms of the sale was dropped by the government last fall, and insider Russian banks Most and Alfa were believed to have been granted rights to organize the auction and an inside track on acquiring the shares.

Boiko, however, said the decision to drop London-based investment bank N.M. Rothschild as consultant to the Svyazinvest sale is "not a decided matter yet." Rothschild officials could not be reached for comment.

Advisers to the deal would be chosen only through fair competition, Boiko said.

"We don't have the right to choose any particular counselor," he said. "The winner [of the right to organize the auction] will be decided in a tender."

Another official close to the deal, Svyazinvest managing director Nail Ismailov, said Thursday that bids for the company would continue to be accepted next week, but he could not provide an exact closing date.

Last year's deal to sell 25 percent of Svyazinvest to a strategic investor, Italian state-owned telecoms company STET, collapsed amid disagreements over terms of the sale.