World Dialogue on Regulation

According to a Reuters report, Uzbekistan’s government will only sell a 49% stake in Uzbektelecom. The move came as a surprise to a  consultant working on the privatisation who said a minority stake would be difficult to sell. An Uzbektelecom representative said the government decided to reduce the stake to 49% from 64.2%.

"The cabinet of ministers adopted the decision on September 29," the representative said.

The modified sale will result in the government owning 45% of the company after privatisation instead of 30%. The sale was due by the end of 2004.

Uzbek government officials had said that Russian operators Golden Telecom and AFK Sistema had expressed interest in buying a majority stake in Uzbektelecom. The government's advisor on the privatisation said investors might not wish to own a minority stake.

"Working as the government's privatisation consultants, we have always proceeded from the maxim that it is a majority stake that finds a buyer," said Torsten Erdmann of Commerzbank.

"I have doubts the investor would be able to control this company," he added.

Germany's Commerzbank AG has been leading a consortium of legal and financial consultants advising the government on Uzbektelecom's privatisation.

"The fact that the government has now decided to totally reconsider the whole structure of the sell-off comes as a real surprise to us," Erdmann said.

Uzbek government officials said in August that other potential bidders for Uzbektelecom might include Korea Telecom and Israel's Solan Communication.

While the government tightly controls the economy, Russian firms have made two major acquisitions in the alternative telecoms market. MTS, Russia's top mobile operator and Sistema's biggest telecoms asset, in July bought 74% of Uzdunrobita, which has 51% of Uzbekistan's mobile phone market. Golden Telecom, 20% owned by Telenor recently bought 54% of Buzton, which accounts for 60% of Uzbekistan's alternative telecoms market.

Intelecon Research & Consultancy Ltd. 05/10/2004