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. Last Updated: 07/27/2016

Soros Adviser to Svyazinvest: Sell Stakes

When the consolidation of Russia's fragmented, undercapitalized state telecommunications is over, state telecoms holding Svyazinvest should sell its stakes on the market, an adviser to Svyazinvest investor George Soros said.

Leonid Rozhetskin, an investment banker who advises the international financier on his stake in the state telecoms holding, said in an interview that Soros wanted the government to cease managing the operators once they consolidate and keep a golden share to protect state interests.

"The next task that Soros has put to Svyazinvest and the government as his partner is to take the next step and give the operators free access to the capital market and in doing so indirectly decrease Svyazinvest's stakes to less than 51 percent," Rozhetskin said.

He said Svyazinvest, which has voting control of dozens of local monopolist telephone companies, should stop managing the firms when it finishes consolidating them in the main stage of the reform, which is set to end sometime next year.

"We don't see a management mission for Svyazinvest after restructuring," Rozhetskin said.

The Communications Ministry has said it is considering a golden share mechanism. But lest operators shirk social burdens, such as unprofitable rural services, Svyazinvest chief Valery Yashin says the state should keep its stakes for 10 years.

Soros has said he wants his Svyazinvest stake converted into direct stakes in the seven new operators, which Rozhetskin and Svyazinvest officials say is one option being considered.

Rozhetskin said that the government should abandon its long-debated plan to privatize a second stake in Svyazinvest and auction direct stakes in the seven operators. He said that would bring more money to state coffers than a Svyazinvest stake sale.

Rozhetskin, who heads Moscow investment banking boutique LV Finance, said he was working to debut a company he owns himself on the stock market

LV Finance, which has a venture capital business in addition to its corporate finance work, controls 65 percent of Sonic Duo. The rest is controlled by Sonera of Finland.

Sonic's two stakeholders are planning to consolidate the operator with St. Petersburg firm NorthWest GSM, held by Sonera, Telia and Telecominvest, to create pan-Russian operator Megafon and launch it on the stock market by 2005.