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. Last Updated: 07/27/2016

Kremlin Releases Terms For Svyaz Value Tender

The Russian government announced the terms Friday for a tender to value telecommunication holding company Svyazinvest; a value to be used in setting the price for a stake of 25 percent minus two shares to be sold at auction in September.

Applications from foreign and Russian companies will be accepted from Monday until May 10, with a winner to be announced May 12 and a contract signed May 15, according to a ministry statement published in the daily Rossiiskaya Gazeta.

Participants must have no connection to bidders in the September sale, such as being a bidding partner, consultant or bid creditor.

The contract winner will have just two weeks -- until June 2 -- to value the company, a time requirement that analysts said could make the job a difficult one given Svyazinvest's majority stakes in 88 regional telecommunications companies.

Adding to the challenge, many regional telecoms do not conduct audits according to Western standards and do not offer shares on the market, analysts said, although Svyazinvest itself is relatively open in reporting assets and financial structure.

Earlier this month, investment house Brunswick Warburg estimated the stake at $1.7 billion, but many believe the government is aiming to raise $2 billion to $3 billion.

Money from privatizations is vital to finance the federal budget. Analysts believe about $1 billion of the money raised by the auction will be reinvested in the sector.

Analysts said the decision to hire a valuator, which mimics a technique first used in setting the price of state-owned oil company Rosneft, shows the government is serious about convincing investors that the sale is fair and the price is right.

Controversy descended upon last year's sale of a 25 percent plus one share stake in Svyazinvest after the Cypriot consortium Mustcom, led by Uneximbank with heavy backing from U.S. billionaire George Soros, won the stake for $1.87 billion. Opponents have accused authorities of fixing the deal.

"This time, they want to avoid any speculation of scandal," said Andrei Braginsky, a telecoms analyst at Skate consulting group. "It's important both from the political and social point of view, and then it's obviously good for potential buyers to know what they are buying."

The government has said it is considering either selling the shares as one large stake or splitting them into smaller packages.