Experts say that the starting price of UAH 12 billion, which was set by the Cabinet of Ministers, for 67.79% of the shares in Ukraine's major telecommunications company Ukrtelecom is understated.

"Naturally, understated. But the problem is over channels, access to common use nets. While selling Ukrtelecom in this form we are dooming the market to specific relations with a monopolist, the more so it is necessary to understand that, in principle, we have just a few serious bidders: MTS (Ukrainian Mobile Communications), Alfa Group, SCM (System Capital Management, Donetsk)," says Yaroslav Pavlovskyi, deputy director of Information Society Institute.

In the words of Internet Association of Ukraine head Tetiana Popova, Ukrtelecom has in all 18,726.248 million shares, which by April 8 were quoted in PFTS at UAH 0.9383 each, so the starting price was set according to the current quotations.

"This is not right, to my mind, as its capitalization is minimum 3.5 times more," Popova said.

She noted that evaluation of such an enterprise proceeds on the basis on several terms, including with regard for western analogs, and the real cost of the company from the viewpoint of stock market is about UAH 50 billion.

"From the viewpoint of capitalization, market share and influence on this market, Ukrtelecom's starting price should be minimum two- or three-fold higher even without channels, or it would be even more," Popova said.

Meanwhile, in the opinion of National Communications Regulation Commission Chair Volodymyr Zverev, if everything was taken into account in the terms for privatization of 67.79% of Ukrtelecom, including the property complex of Ukrtelecom itself plus Utel, the starting price is quite adequate, and the ultimate cost will be set in the course of the contest.

"Much more important here are the terms set to the buyer, rather than the cost, taking into consideration the weight and influence of Ukrtelecom on the market of telecommunications," says Roman Khymych, expert with the Netton CG (Kyiv) consulting company.

As Ukrainian News earlier reported, the Cabinet of Ministers endorsed on April 8 terms for privatization of 67.79% of the shares in Ukrtelecom, with a starting price of UAH 12 billion.

Ukrainian Prime Minister Yulia Tymoshenko predicted that privatization of Ukrtelecom would take place by July.

Ukrtelecom finished 2007 with a net profit of UAH 267.193 million, having increased net revenues by UAH 107.762 million or by 1.2% over 2006, to UAH 6.809 billion.

Ukrtelecom occupies 78.5% of the fixed telephony market, servicing over 10.1 million subscribers, and provides mobile communication services of the third generation in the UMTS standard under the Utel brand to over 13,500 clients.