SPF plans to privatize Ukrtelecom in 2010

State Property Fund Acting Head Alexander Riabchenko said at a press conference yesterday that the government plans to sell its stake in Ukrtelecom (UX: UTEL UK) this year. Riabchenko said the starting price would be no less than UAH 7 bln and could fetch as much as UAH 10 bln. The government holds ~93% stake in Ukrtelecom. Yegor Samusenko: We remain cautious on political announcements about the privatization of Ukrtelecom, which has been floated at various points for the last ten years. However, we note three fundamental factors that favor privatization in late 2010-2011: 1) the ~5% budget deficit in 2010E is second highest in the last decade and motivates the government to increase proceeds from privatization; 2) the absence of political opposition to the privatization of Ukrtelecom; and 3) the weak financial performance of Ukrtelecom shows that the state is an inefficient owner. We note that Ukrtelecom requires 6-18 months of preparation for privatization, even with strong political will to privatize it.