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  A cloud was cast over the latest stage of Ukraine’s marathon campaign to privatise Ukrtelecom, a state telephone company, as officials announced on Tuesday that only one bidder had registered for the auction. Epic, an Austria-based investment firm, emerged as the sole bidder for a 93 per cent stake in Ukrtelecom, Ukraine’s fixed-line telephone monopoly, for $1.3bn. Ukrtelecom’s shares on Ukraine’s stock market plunged by nearly 9 per cent on the news, a clear negative reaction to what was supposed to be the first big privatization tender run by Viktor Yanukovich since he took over as Kiev’s president last February. The sale was closely watched to gauge how transparently privatisation will be conducted under his leadership. Concerns remain that valuable assets could be sold off at below market prices to well-connected oligarchs, as happened when Yanukovich served as prime minister in 2004. The government owns 93 per cent of the company and the privatisation auction was originally planned for December 28. But with only one bid registered, government officials said the sale will be put off until early next year, so that an appraiser could establish a final sale price in the absence of a competitive tender. If Epic agrees to the price set, it could be chosen as the tender winner. But experts already fear that Ukraine’s government missed its opportunity to sell Ukrtelecom transparently and for its fair worth. Analysts questioned the transparency of the sale from the get go, when it was launched in October amidst controversy. Tender rules restricted leading global telecoms companies from the bidding. Many top European telecoms companies that have to various degrees expressed interest in Ukrtelecom over the years – including Deutsche Telekom and Norway’s Telenor – were prohibited from taking part in the tender because they are more than 25 per cent government-owned. A second tender condition prevented bidding by telecoms that had more than a 25 per cent share on the Ukrainian fixed-line and mobile telecom market. On Tuesday, speculation loomed that Epic was acting as a front for Ukrainian or Russian oligarchs. Referring to Epic, Tomas Fiala, managing director of Kiev-based investment bank Dragon Capital, said: “They are most likely acting on behalf of a Ukrainian or Russian group. I don’t think Epic has the financial resources to make such a sizable investment on their own.” Speaking with the Financial Times by telephone, Epic’s managing partner Peter Goldscheider insisted his firm was “bidding alone,” and hoped to raise financing from banks to wrap up the purchase. “This would be our biggest investment by far,” he said. “There are no strings attached, no hidden interests,” he added. In the months after the sale was announced this fall, analysts had expected bids from Ukrainian oligarch Rinat Akhmetov, a close backer of Yanukovich, and Russia’s telecom groups such as Sistema. Officials at Sistema and its regional mobile phone network operator MTS said their group decided not to bid, concluding that the starting price of $1.3bn was overpriced. An official at System Capital Management, Akhmetov’s holding company, was less clear. Asked if his group could take part in the tender as a partner of Epic via a consortium, he said on condition of anonymity: “not presently.” “Given the circumstances, how long the company has been on the block and poorly managed, selling it for the starting price to any private investor is progress,” Fiala said. “But if it was competitive tender, Ukraine could have raised up to 1.8bn,” he added. Ukrtelecom controls about 80 percent of the fixed-line market in Ukraine, a country of 46m citizens. A highly-bureaucratic and mismanaged corporate dinosaur, experts say Ukrtelecom has lost much of its value in the past decade, falling decades behind European peers in terms of introducing new telecom technologies. It has been slated for privatisation for more than a decade but the tender has been repeatedly delayed amidst political squabbling. Ukrtelecom holds the country’s sole 3G licence and has a relatively small mobile business but it earned only $6m in the first half of this year. Corporate and private clients have increasingly turned to better quality services provided by privately-owned mobile and fixed-line operators. (c) Roman Olearchyk, ft.com

Ukraine’s State Property Fund has been drumming up serious interest for the government’s 92.79% stake in the country’s former fixed line monopoly and sole 3G mobile licensee, Ukrtelecom. Analysts expect bidding to top the $1.3 billion bid price set in October. Ukraine’s richest, Rinat Akhmetov, is among the likely Ukrainian candidates. His System Capital Management runs fixed line and broadband operator Vega (formerly Farlep/Optima) as well as jointly owns Astelit with Turkish partner Turckcell (controlled by Turkish billionaire, Mehmet Emin Karamehmet.) The prized asset is also on the radar of Russia’s Vladimir Yevtushenkov who heads London-listed empire AFK Sistema. Included in his conglomerates holdings is a stake in London-listed mobile carrier, MTS. The auction is expected to top the $4.8 billion purchase of Kryvorizhstal by the world’s largest steel group, ArcelorMittal, and is also considered a test of the transparency and commitment to fair play by Ukraine’s new government under President Viktor Yanukovych, who took power on Feb. 25. Some analysts contend that auctions conducted when Yanukovych was formerly prime minister were driven by insider oligarch interests. Let the billionaire battle begin. (c) Tatiana Serafin, Forbes

Ukrainian mobile operators Kyivstar, MTS Ukraine, Astelit and Beeline Ukraine are opposed to the proposed universal service fund, saying it's inefficient and doesn't correspond to the needs of consumers.

Ukraine's Antimonopoly Committee (AMC) will decide within a month on whether the merger of Russia's OAO VimpelCom and Ukraine's CJSC Kyivstar GSM into Vimpelcom Ltd. Holding is in line with Ukraine's national competition legislation, AMC Chairman Oleksiy Kostusev has said. 

Mobile services operator life:) announces its financial and operational results for the fourth quarter of 2009 and year ended December 31, 2009. Despite the fact that Ukraine was one of the countries that highly hit by the global economic crises, the operator managed to sustain the consistent growth of all its main financial indicators in local currency. In the fourth quarter of 2009 economic turmoil in Ukraine continued and the volatile political and macro-economic environment continued to have an adverse impact on the local currency. Year-on-year depreciation of hryvnia against the US dollar was approximately 47.7% and thus impacted the telecommunication market and life:) financial performance in US$ terms in particular. Despite the unfavorable environment, life:) increased its revenues in local currency. In the fourth quarter of 2009, life:) revenue in UAH increased by 10.3% compared to the same period of 2008 year. At the same time in dollar equivalent this financial indicator declined by 16.2% to $92.8 million mainly due to the depreciation of the UAH against the US$. In 2009, life:) increased its revenue in UAH by 19.5% compared to 2008 year but decreased it in US$ by 20.0% to $351.1 million - again under the impact of UAH devaluation. In 2009, life:) recorded EBITDA of $20.2 million and $6.9 million in the fourth quarter of 2009. The EBITDA margin decreased by 1.7 percentage points to 5.7% in 2009 from 7.4% in 2008 mainly due to increased share of interconnection costs as a percentage of revenue. In the fourth quarter of 2009 the EBITDA margin also decreased by 6.4 percentage points down to 7.4% from 13.8% in the fourth quarter of 2008. In 2009, life:)’s subscriber base kept increasing and reached 12.2 million from 11.2 million in 2008. Three month active subscriber base grew by 9.9% year-on-year. In 2009, MoU increased by 6.5% to 158.7 minutes compared to 2008. The CEO of life:) Tansu Yegen has commented: “Despite of the number of economic challenges and though competition on the Ukrainian telecom market, 2009 year became for us a good ground for further expansion in terms of number of subscribers, revenue and investments. In 2010 we will be fully focused on our main priorities: to enhance quality of our network and services, to offer highly targeted products, to introduce competitive and innovative loyalty programs and further invest into technologies and infrastructure and improve our market position whilst maintaining our focus on profitability. The competition will be getting tougher but we are ready to meet the new challenges of the market and to keep growing trends in our financial and operational results”. The national mobile services operator life:) is the leading operator on the market in terms of new customers acquisition, serving 12.2 million subscribers (as of Q4 2009). life:) network covers the territory where 94,8% of population lives. life:) provides roaming opportunities in 172 countries via 455 roaming partners. The operator was the first to introduce EDGE technology to the market and provides its customers with wide EDGE coverage via 100% EDGE enabled cells. life:) offers high quality mobile services for all segments of the Ukrainian society. Currently the rational expenses for mobile communications are of great significance to any subscriber. life:) offers its customers beneficial and transparent tariffs which grant freedom of communication and make the communication expenses predictable. 488 life:) customer care centers and exclusive sales points operate in 185 cities of the country. In addition to that, life:) subscribers can order life:) services through 34 600 non-exclusive shops.