Could you give us some information about the main activities of the Agency, and how it has developed over the years?
I would start my interview with a little explanation why our Agency is called the Post and Telecommunication Agency and not the ministry for communication.
In 1997 the government of Uzbekistan has decided to start the privatization process in the field of communication. It was opened a Post and Telecommunication Agency on the base of the Ministry for Telecommunication, and then this was followed by the division of the Post and Telecommunication Agency into two different companies. This division was made on the whole territory of Uzbekistan. The regional divisions were also divided into Post and Telecommunication branches. In 1997 there was issued a resolution of the cabinet of ministers and the decree of the president according to which the ministry for telecommunication was transformed into the Agency and telecommunication which was in charge of privatization of all those companies. Thereby, there were created separate post and telecommunication joint-stock companies in each region.
All post JSC companies were united into a single joint stock company «Uzbekiston pochtasi» (Uzbekistan post). At the same time the single JSC «Uzbektelecom» was divided into two companies «Mahalliy telecom» (Local telecom) and «Halkaro telecom» (International telecom), and which united all the functions of the local telephone communication and «Halkaro telecom», which was involved in international communication. Those two companies had existed for three years and this year they emerged into a single company «Uzbektelecom».
Now let me mention the major reasons for these changes. At the time when the Post and Telecommunication Agency was created, it was planned to privatize the international and local communication. The JSC «Halkaro telecom» had even prepared a big contract with the Italian company «Stet international», according to which it was planned to open a joint - stock company in international communication but due to a number of reasons the contract was not signed. Today we realize that that was not really the right way because if we had given out a large portion of international telecommunication nobody would be interested in local communication.
In 1999 the World bank has shown a big interest in the privatization process in Uzbekistan in the field of telecommunication. The World Bank has provided a loan which was assigned to conduct this process, having as the main purpose the attraction of foreign investors. There were invited experienced consultants of the World Bank for this loan which recommended us first to combine those companies - Mahalliy and Halkaro telecoms in order to offer them a single operator.
Besides that, those consultants have recommended and helped us to create a legal base. We have worked out a Law on telecommunication with assistance from those consultants, which was accepted in last August. We implemented a rich experience in the creation of the legal base. Besides that we have prepared all kinds of sub law acts which expanded and explained this law including definition of tariff regulation, licensing, etc. There was conducted a tender for a financial consultant with the assistance of the World Bank in order to prepare all necessary documents. As for now, the tender is over and the World Investment News Ltdr is «Commerz bank of Germany» together with Arthur Andersen.
I should underline the fact that the government has decided to keep 30% of shares as a state share and sell out 70% of shares, whereby not less than 51% should be sold to a single foreign investor. The remaining 51% should be sold to others.
At the moment we are having intensive negotiations with our potential investors. However, before that we are going to make an agreement with them to undertake some operations prior to signing the long term cooperation agreement. There was an offer of the EBRD to be the first that buys the shares and thereby to attract more investors to buy our shares. We hope that it will happen soon and some portion of shares will be sold to EBRD prior to selling remaining shares. There are some other respected world known companies that are also interested in this process and thus wish to buy our shares. There are about 19% of our shares that we can vary with. It is all being done just to attract the attention of large investors. We hope that the readers of your magazine may apparently become our investors and should your magazine contain such information it will help us much.
Our main process is privatization followed by conditions and perspectives of further development.
We are working out an investment program and business plan for the next 5 years by the request of EBRD. We might enlighten these issues in your magazine as well because what makes us interested is the ways for development.
What is your assessment of the cellular communication sector, and what is its potential for growth?
Uzbekistan has one of the unique cases of working with cellular operators. The reason is that there is a relatively large number of operators for a relatively small number of subscribers. There are about 100,000 subscribers at the moment, which is very little for our country. There are 6 operators which in turn create a competition from one side but also getting into a situation where the operators become less effective which prevents their further development. Only 3 of them performed reasonably in the market during the last 5 years, and others do not seem getting enough support of their foreign supporters. The task of our Agency is to decrease the number of operators of cellular communication and aimed to better development of cellular service operators. I believe the best way to achieve that is to merge those companies. If this does not happen their performance level will stay the same and then we will have to take out their licenses within the legal framework. This relates to the operators which do not satisfy the license requirements including the one which means following their business plans that indicate the ways of development of the coverage territory and subscribers' quantity. There were provided frequency resources but there are still no considerable changes.
| What are the three largest operators in the country?
Those are «Uzdunrobita», that was founded in 1992, «Coscom» and «Daewoo Unitel» that were founded in 1996. «Uzmakom», «Buztel» and «Rubicon Utel» do not seem developed yet and those are the companies whose licenses might be taken out. They are warned very frequently. We have been warning them for the last year and a half and required them to develop more dynamically but they have not been able to do so due to the financial problems. We realize that they contain large foreign investments and we do not want to harm the rights of foreign investors and therefore we are not undertaking sharp actions, but acting within the law and hope to solve the problem correctly.
How do you view the development of internet in Uzbekistan?
Unfortunately, Internet is not developed yet. The major reason is the lack of computer technology especially in the private sector and there is no sharp necessity for Internet service at the moment. The second reason is the poor equipment of data transformation network. We are working in two directions, first - computer technology equipment of industrial and state programs, second - the increase the number of private users. This is observed by overloading data transformation networks and we are currently creating a few other independent networks.
We can observe a wide spectrum of possibilities for competition. There was created a data transformation network under the Tashkent telephone network and also there is another data transformation network «Uzpak» which has been acting since 1994. Along with that there is also acting the data transformation network of «Buzton» which is an Uzbek-British company founded in 1995 which is used to provide only telephone services. So as you see, we have completed the creation of a base which satisfI should note the fact that all types of communication services are liberalized in the internal market. There is only one type of services under the monopoly of state - international telephone communication, which was recommended by the World Bank.
Besides that, I want to note that we are trying to make our shares more attractive for foreign investors. We are ready to provide a license of a national operator of cellular services but only without exclusivity for international communication. Probably we would provide a license of a third generation cellular communication. We still keep such reserves so that our shares become more attractive. Uzbektelecom has all the necessary and required licenses to conduct the full range of activities in Uzbekistan. So as you see we do not have exclusivity in data transformation network and we try to develop it as much as possible.
We have 30 providers of data transformation services and we are quite open in this way. We realize that we will not be able to develop without the participation of large world capital and large operators and therefore we keep the gates open for telecommunication.
Let me tell you about postal services. Our Agency is also in charge of postal communication in the country and we have a joint stock company «Uzbekiston pochtasi». The postal communication is not highly effective just like in other countries and as you know postal agencies are supported by the governments in all countries of the world. We do not like to be beggars and therefore we worked out our own program. We have studied the world experience and the practice of the countries where postal business is very effective and realized that if we will start to provide banking services at the post offices it would become one of the best ways for development of the postal business. We have our own bank «Aloka bank» which means «Communication Bank».
We developed a program for providing postal and banking services through the post offices and we have more than 3.5 thousand post offices in the country that are all linked by the network. We also have a good personnel working in those offices and our employees can provide banking and other services. The only thing which remains to do is just to equip them with computer technology by which they can do so. We have already prepared a program provision and we are currently testing it. The post offices now provide all types of mailing and banking services such as acceptance of utility payments for gas and electricity. The next step will be the provision of services like savings accounts and loans. Then we are planning to provide Internet services in our offices and we are looking for investors. We have many offers and hope to start equipping all the post offices.
NOTE: World Investment News Ltd cannot be made responsible for the content of unedited transcriptions. |
Post and Telecommunication Agency of Uzbekistan