The FT this week ran an article about the recent sale of Ukrtelekom, Ukraines national incumbent telephone service provider, to an Austrian based investment house, Epic. Epic have bought up 93% of Ukrtelekom for the bargain basement price of $1.3bn.
I’ve been following the back-story of this particular sell-off, or rather, privatisation, for some time now, as it was on the cards way back when I was still living in Kiev. The more interesting notes behind the entire saga of this particular sale hark back to the valuation of Ukrtelekom, and the current governments constant haranguing and insistent challenges of the then government that the sale price for this item of the Nations silverware was too low.
Interesting then that the valuation put forward by the previous government valued Ukrtelekom at $1.5bn for a 67% stake. At that price, it would not have been unreasonable for the citizens of Ukraine to have expected the price paid by Epic for the 93% they just bought to be closer to $2.1bn rather than the $1.3bn they got it for.
And all the while, whilst Epic were working out how much to pay for Ukrtelekom, the current government excluded rivals from the bid. Seemingly they forgot all about their protests of a fire-storm sale when they were in opposition.
In a country where the government routinely sell-off national assets and the nations prized natural resources are raped, pillaged and sold-off at bargain basement prices to repay those oligarchs who footed the bill to get them into office, this recent, albeit poorly constructed, attempt at transparent privatisation has failed miserably. President Yanukovych’s previous foray into public office was met then with a wilful blundering and sale of the country’s silverware at below market value. Typically in the form of large tranches of land rezoned and sold off for pennies on the dollar.
Epic of course deny that they are a front for one of Ukraine’s billionaire oligarchs. I guess only time will tell. The facts are undeniable though. There is already a menagerie of Off-Shore entities set-up as the legal owners of cheaply sold government assets. The most notorious of these fronts being RosUkrEnergo, which according to a Global Witness report is linked with Dmitry Firtash, and whom acts as the middleman for gas sales which pass from Russia to Ukraine. Quite why a middleman is required is unclear, afterall the price of gas is already too high in Ukraine without some oligarch creaming it from the top and thus resulting in even higher prices to be passed on to Ukraine’s citizens.
What’s next on the list of silverware up for grabs? Well it cannot be the Rada (Parliament) as it’s been bought and sold ten times over by now.
The FT article can be found here