Russia’s Rostelecom hard to sell with secure telecom net control

MOSCOW, Aug 26 (PRIME) – Charging Russian state-controlled telecom operator Rostelecom with organizing a secure network for state agencies will complicate the company’s preparation for privatization and will discourage investors from entering its capital, analysts told PRIME late Thursday.

“Creation of such a network would technically make the sale of Rostelecom easier, but taking into account the fact that the expected value of the project exceeds Rostelecom’s capitalization, it won’t certainly raise interest of potential investors,” Raiffeisenbank analyst Sergei Libin said.

The government’s stake in Rostelecom – 43.07% of the capital, or 46.99% of common shares – was put on the sale list for 2014–2016, but the deal was delayed. The Federal State Property Management Agency said earlier that it is necessary to work out a technical assignment of exploitation of the company’s infrastructure servicing special consumers.

Mass media earlier reported that the Security Council’s Secretary Nikolai Patrushev intends to revive the idea of an integrated connection network for state agencies and offered Rostelecom to implement the project costing the budget at least 500 billion ruble.

Otkritie analyst Alexander Vengranovich said the government will not sell its stake in Rostelecom if it manages the network. “The secure network will be a strategic asset, and such assets will be withdrawn from Rostelecom before privatization and they will sell, correspondingly, only the commercial part,” he said.

“If they decide to build a protected cyphered network for state agencies, it should be done within a separate company, which will be beyond the privatization perimeter.”

The analysts doubt the realization of the large-scale project.

“In view of the current economic situation…We don’t have money for pensions; funding of lots of parallel no-core projects is being reduced. It would be such a luxury that would consume investment from other sources or could be realized if the country sees a quick recovery of the macroeconomic situation,” Vengranovich said.

(64.9459 rubles – U.S. $1)

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