Ukrainian oligarch acquires controlling stake in Ukrtelecom

A holding group owned by Ukraine’s richest man has acquired a 92.79% stake in Ukrtelecom. The operator holds a 3G licence and has a functional monopoly over the country’s fixed-line sector.

SCM Group, controlled by Ukrainian oligarch Rinat Akhmetov, has purchased the stake from Austrian investment group EPIC for roughly the same price that the latter group paid for it back in 2011 (around $1.3 billion) when the operator was privatised. The deal will require the approval of antitrust regulators.

As it already holds a stake in Ukrainian number three Life, SCM Group is aiming to capitalise on this experience to “offer new products and services to the existing customers, to attract new clients and build a more advanced telecommunication infrastructure in Ukraine”.

Life – which is co-owned by Turkcell – has around 11.1 million subscribers. The market is led by Telenor/Alfa Group subsidiary Kyivstar with 27.5 million, while MTS Ukraine is second with 208.8 million.

The deal could see WCDMA technology used to launch high-speed mobile broadband across the Ukraine. This would be a first for the country.

Some observers – including the head of the investment bank Investment Capital Ukraine, Alexander Valchyshen – believe that the deal amounts to little more than the country’s oligarchs snapping up old Soviet assets at a “hefty discount” when they should be investing in R&D. For its part, SCM Group has denied that the deal would “limit competition in Ukraine’s telecom market”.

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