Ukrtelekom Finally on Sale

The Day's questions about the particularities of this process is being answered by Leonid NETUDYKHATA, general director of Ukrtelekom.

"Mr. Netudykhata, the future privatization of Ukrtelekom provokes well-grounded concern: we see the experience of Russia, where not only problems but also scandals have cropped up. How will the Ukrainian scheme differ from the Russian one?"

"It is difficult for me today to go into detail on issues to be dealt with by the state, for we, first of all, fulfill the tasks we are given; we do not map out a strategy. As to the shortcomings of the Russian telecommunications system and its privatization, we took it into account during our preliminary work. We carried out restructuring and brought all the regional Telekoms into a single mechanism, an integrated property complex. Ukrtelekom is a single juridical person with one settlement account, i.e., a single technological, financial, and organizational structure employing about 130,000 workers. The restructuring allowed us to cut costs and make the united structure function on the country's territory.

"The Russians do not have this today, and from this flows the serious problems they have. When they were conducting the privatization, they did not have a single complex, privatization was carried out by regions, so the investors did not show much desire to invest in such scattered communications networks. We, on the contrary, hope investors will not have major problems."

"What time-related prospects of privatization do you see?"

"The market situation is volatile: it changes from more complicated to more attractive, this is why all the countries that have privatized their telecommunications prepared the legal basis in advance: they passed laws and decrees. They chose a starting moment on the basis of the demand on their own stock market and on the markets of other countries. This is a very complex technical procedure, independent of the date when the decree is issued. I will not venture to foretell when this will happen. Everything will depend on a favorable market situation, on when the right moment arrives."

"As far I understand, you have a monopoly on the telecommunications market. Why is privatization necessary?"

"Not quite so. We only hold a monopoly on low-profile services. Ukrtelekom is a purely state-run enterprise which solely carries the burden of social liabilities toward the public-sector and privileged categories of the population, along with many other things. We have undertaken certain commitments, which market operators always refuse to assume and thus cut off sufficiently serious market segments, especially for high-profile services, such as mobile, satellite, international communications, and Internet access. This is one of the reasons why we should hasten to change the position of Ukrtelekom. Besides, world practice shows that there still should be investments in the basic telecommunications sector, so that other operators could gain access to all communication networks on the basis of basic commutation stations and relay systems. This requires investments, and privatization is one of the best ways to attract them. It is the strategic investor that can bring in new technologies and funds."

"And what about the low-profile services? Will they lose out with privatization?"

"There is foreign experience here also. The state sets up a fund to support the low-profile and unprofitable sub-industries at the expense of allocations. What kind of allocations and where from is the state's problem, not Ukrtelekom's. The state can solve the problem this year, as well as a year or two later. Of course, I wish it would be earlier. Such allocations are exclusively utilized for the loss-generating areas of work, the so-called universal access of the population to all services. This access loses money everywhere in the world and is made up for at the expense of those operators who work on the market."