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. Last Updated: 07/27/2016

Reiman Switches Gears, Backs Quick Svyaz Sale

For MTIT Minister Leonid Reiman
IT and Communications Minister Leonid Reiman wants to speed up privatization of telecoms holding Svyazinvest, analysts said Monday, a switch from his previous view that internal reforms must come first.

"Reiman is now a strong advocate of privatizing the entire 75 percent stake as quickly as possible," UFG quoted Reiman as telling a breakfast with investors.

The government wants to sell 75 percent less one share in Svyazinvest, which controls long-distance fixed-line monopoly Rostelecom, seven regional telecoms and numerous providers.

Reiman had maintained that Svyazinvest would not be privatized before internal reforms had been completed.

"He now ... is actually afraid that it may be too late (citing rapid market growth and market share losses of the incumbent operators)," UFG wrote in a morning note.

Svyazinvest's sale is difficult because the company is on a list of strategically important firms whose privatization is limited.

But Deputy Economic Development and Trade Minister Andrei Sharonov told investors Monday that a new presidential decree is being prepared to remove Svyazinvest from that list.

"[The decree] is being reviewed by the relevant agencies," Sharonov said.

The deputy economic development and trade minister added that the move would allow the state's remaining 74.9 percent stake in the company to be sold in 2005 as originally planned.

Troika Dialog also quoted Reiman as saying that Svyazinvest's share in total sales of telecoms services in the country had shrunk to around 37 percent in 2003 from around 80 percent in the late 1990s.

The IT and Communications Ministry declined to comment.

The Economic Development and Trade Ministry has suggested a starting price of 85 billion rubles ($2.9 billion) for the stake.

The winner in the auction, in which domestic financial-industrial giant Alfa Group, AFK Sistema and St. Petersburg telecoms firm Telekominvest have expressed interest, will get control over and access to all of the country's fixed lines.

In 1997, Russia sold 25 percent plus one share for $1.875 billion to Hungarian-born American financier George Soros, who later called it his worst investment ever.

Earlier this year he sold the stake for $625 million to New York-based Russian oil and metals magnate Len Blavatnik.

(Reuters, MT)