Government To Raise Ukrtelecom's Value.

On Friday the government began reviewing proposals from the State Property Fund (SPF) and Ukrtelecom (UTEL: BUY) on increasing UTEL’s value. Key items in the proposal:

–         Allowing UTEL to decrease telecommunication tariffs without the approval of regulators

–         Using UTEL’s dividends from the state’s stake to partially pay off state debt to UTEL (about USD 80 mln)

–         Separating the state’s telecommunication services department of UTEL into a special state enterprise, effectively decreasing the      state’s pressure on UTEL

These proposals are only preliminary and need to be approved by the Cabinet.

Note that on April 15-20 the government is going to approve the terms of UTEL’s privatization.

Concorde Capital: If these items are approved, UTEL will be able to independently approve its long-distance tariffs, making it more price-competitive with local mobile operators. Another important problem – compensation of UTEL’s provision of universal telecommunication services (social services which are priced below cost) still need to be resolved.