Could you provide us with certain background information on your company, its structure and main activities today?
As you know reforms have taking place in the telecommunication field since 1992. In 1993-94 new digital systems started to be implemented and subsequently there have been changes in the management structure of the market economy. Uzbektelecom was established in 1992, and all telecommunication divisions including international and other long distance communication companies were subordinated to Uzbektelecom which lasted until 1997.
Starting in 1995 the telecommunication market has been studied intensively by foreign companies and operators and consequently, certain financial institutions have made their offers on changing the structure of joint activity with foreign companies. There was prepared a package of documents in cooperation with "Italytelecom" on the creation of a joint venture on international and interstate communication services, and there was also prepared another package of documents in cooperation with other companies on the creation of a joint venture on local communication services. At the moment, we have two joint ventures - "Chirkom" jointly with the German companies "Deteline" and "Alkatel", and also "Bakrie group" jointly with Indonesia. Those joint ventures are operating in Samarkand, Surkhandarya, Jizzakh and Kashkadarya regions. The task of those companies is to reconstruct and develop the network according to the national program which was worked out and confirmed by the resolution of the Cabinet of ministers issued in 1995.
We were also involved in the creation of joint ventures in other regions of the country, which were very successful due to the crisis in Asia which took place in 1997. Another reason for that is that the foreign consultants offered us not to develop the telecommunication network separately. Due to the liquidation of the Ministry of Communication and also due to creation of the Agency for post and telecommunication, there were created two telecoms - "Halkaro telecom" for providing international and interstate communication services and "Mahaliy telecom" for local communication services. By 1997 the situation has changed and the demand for telecommunication market has decreased not only in Uzbekistan but also in other countries.
We have worked by the same management structure during the period of 1997-2000, and by the end of 1999 the government took the initiative to privatize the telecommunication sector. In that sense there was a tender commission headed by the State committee for property to organize the privatization process. Moreover, there were also invited experts of the World Bank who have studied and evaluated the situation. Based on their evaluation few steps have been taken on the implementation of the privatization program of the telecommunication sector in the country.
First of all, there was a need for a law on telecommunication. Secondly, there had to be issued a resolution of the Cabinet of ministers on combining the two telecoms. Thirdly, there had to be issued a resolution of the Cabinet of ministers on licensing activities. The further internal restructuring of the telecoms was necessary, and all these requirements were presented in order to increase the attractiveness of the Uzbektelecom shares. The resolution on combining the two telecoms was issued in June 1993. At the moment the proposal on licensing activities is on hand and it was agreed with all related ministries and organizations, in other words the preparation to privatization is taking place.
When exactly will the last steps of the privatization be completed?
It will be known soon, because we cannot satisfy the requirements of the strategic investor who is willing to buy our shares without solving this problem and therefore we believe this issue will be clarified. Starting from the 1st of October, Uzbektelecom will in fact start its activities and we are already taking measures on the profitability of the telecom and also working on sounding the internal structure of the telecom. We also applied to the Agency for a license which would allow us to provide a few more services such as cellular, data transformation services to Internet, and other new types of services such as "IB Telephone", etc. All those issues are being considered taking into account the proposals of the experts that are currently preparing the privatization process of the telecom.
Currently, we work based on the schedule of actions
that we have. As you know our main task is to satisfy
the communication needs of the national economy
and thereby increase the number of services provided
by creating a competitive environment. Another task
is to reconstruct and develop the telecom network
of Uzbekistan. Thereby we would be able to solve
the issues of cooperation with the world network
and also implement the latest technologies that
satisfy consumer requirements. Having done this
we will strengthen the market economy mechanisms
in the field of communication and thereby integrate
our network into the world network. We are also
concerned with information security and stability
of the network as we take those issues very seriously
and take measures step by step. We have replaced
30% of the technologies for the latest ones, and
we have transferred digital networks to the regions
like Karakalpakstan, Navoi, Bukhara and Khoresm.
We have also solved the "digitalization"
issue by 80%. Of course, we did some mistakes and
founded shortcomings, however due to the assistance
of different companies and consultants and also
other partners we have gained sufficient experience
to implement targeted privatization program of the
industry. |
Are there any other foreign investors that showed interest in buying your shares?
I would not say for sure that there are certain companies interested in buying our shares, but there are many companies that are eager to discuss the privatization process with us. We will have results upon completion of the tender and we already have taken the initial steps. Last week we signed a Protocol of intention between EBRD and the Agency of Post and Telecommunication where the bank is intending to provide temporary financial support for the account of the shares of Uzbektelecom. We also have almost the same preparation process with the Asian Development Bank and also we are working with other companies on paying off the debts for the account of the shares of Uzbektelecom. I hope to see the results by the end of the next year and I hope they will be positive. The reason I'm confident in this is that 50% -70% of the shares will belong to foreign companies. On the other hand, we are involved in a licensing activity which will satisfy any foreign investor and as we will have a good offer by them we will consider the ways of providing exclusive rights for providing long distance and interstate communication services for a certain period of time.
As your industry is very dynamic, how do you see your company competing with the other competitors in the Uzbek Telecommunications sector?
First of all I would say we already observe elements of competition in the telecommunication market. As you know there is a difference between cellular operators and operators of international and interstate communication. The number of subscribers for cellular services reaches 100 000. Besides that there is a joint venture "Buzton" which provides international and interstate communication services, and the number of their subscribers reaches 10 000. We look at this joint ventures as to our competitor but notwithstanding the local operators of interstate and international communication successfully solve the network reconstruction problems, and also successfully solve the issues on providing services to the national economy of the country. There are many subscribers which transfer to our network from the cellular network, e.g. the number of services provided is the same with our competitors'.
As you know our readers are potential investors; could you give us some information on what are the reasons they should invest here in Uzbekistan and what would be your final message to them?
First of all, one of the major reasons for foreign investors to invest here in the country is that we are offering up to 70% of our shares to them.
Secondly, we will provide a license, agreed with the government and the agency, for providing all kinds of services, e.g. there will be no limits for communication. The validity of the license may be prolonged up to 15 years with a condition that it may be prolonged every 5 years.
Lastly, we will offer exclusive rights for providing international communication services based on the permission of the government. Besides that, we will apply all other necessary requirements of the investors to superior government bodies depending on the price the investors would be willing to pay for the shares. Of course, each investor interested in further development and reconstruction besides buying out the shares, and we in turn will provide discounts with the purpose of solving the issue of privatization of the industry and its further reconstruction and development.
NOTE: World Investment News Ltd cannot be made responsible for the content of unedited transcriptions. |
Uzbektelecom