Ukrtelecom AGM Results: The Show Will Go On.

Ukrtelecom (UTEL: BUY) AGM yesterday approved the company’s 2005 results: USD 101 mln net income and USD 1.3 bln net revenue, and voted to distribute 40% of the company’s net income as dividends (DPS 0.002, div. yield 1.0%). The company’s supervisory board was “strengthened” by including two representatives of Ministry of Internal Affairs and State Security Service. UTEL’s plan for 2006 was not considered at the AGM, as the Cabinet has not decided on the company’s future (privatize or not). There will be another shareholder meeting after the Cabinet’s decision on UTEL’s future. Concorde Capital:  The key point in decision about UTEL’s future is related to the trade off between increasing UTEL’s value as a business entity and the state’s two targets: social target (low tariffs, social facilities), and filling the state’s budget (taxes and other payments to the budget, dividends, income from privatization). These targets are not only contradictory, but it has also not been worked out how the individual targets will be achieved. UTEL’s future will depend greatly on the balance of power in the Ukrainian political arena. We expect the final decision in the near future.