To sell or not to sell? Kyrgyzstan mapping the future of major mobile operator
BISHKEK (TCA) — The Government of Kyrgyzstan has decided not to sell the leading mobile operator, Alfa Telecom CJSC (TM MegaCom), experts believe. The Economy Ministry has submitted for public discussion a draft Government program for the privatization of state property for 2018-2020, and has not included the company in it. According to Kyrgyzstan’s legislation, the Alfa Telecom CJSC is an independent legal entity with a private ownership, with 100% of the state-owned shares. After numerous unsuccessful attempts to sell the company, the State Property Management Fund of Kyrgyzstan (SPMF) proposed that the company should remain on the Fund’s balance, and the Government agreed. Earlier this month, SPMF Chairman Renat Tuleberdiev told journalists that the Fund does not intend to sell MegaCom. The company works well, and in terms of profitability it is the second after the Manas International Airport OJSC, he said. Failed attempts There were many attempts to sell MegaCom. The initial price of its shares was 19.7 billion soms (about $306 million) in May 2016, but over time it was reduced to 13.5 billion. In August 2017, after the failed attempts to sell the company through auctions, it was put up for direct bidding. A Russian citizen Elena Nagornaya, who sells African tea and coffee in Russia, was the only buyer. She was ready to pay 14.5 billion soms, including the 7% commission fees and to take responsibility for possible lawsuits of the company. However, in November the Property Management Fund terminated the deal explaining that “the parties failed to reach mutually acceptable terms of sale.” Nagornaya asked to transfer the company to trust management for three years with subsequent redemption but Kyrgyzstan’s law does not allow this. After that, other potential buyers were from Russia, South Korea and Switzerland, but the SPMF canceled all sales procedures because the new privatization program for 2018-2020 was not approved, and the previous program expired. Given the mistakes of previous years, the Government did not take into account the proceeds from the sale of the company in the national budget revenues for 2018. In 2016, the Government hoped to complete the construction of the road around Lake Issyk-Kul before the start of the World Nomad Games by selling MegaCom. The company was not sold, and the construction of the road stopped. The Cabinet headed by Temir Sariyev was forced to resign due to the scandal over the reconstruction of the Balykchy-Korumdu road. Opinions There were very different points of view about MegaCom’s future. If the company is economically profitable for the State, then it is not necessary to sell it, said Prime Minister Abylgaziyev in May. A new assessment should be carried out, he added. Many experts said that it was necessary to sell MegaCom to create equal conditions for competition. If an enterprise is run by the state, its management system becomes very cumbersome, they said. The telecommunication company should develop, introduce modern technologies, and offer high-quality communication services to subscribers. But due to bureaucratic delays, the state-owned company...
