Russian ministries quarrel over Telecoms holding

The issue of national telecoms holding, Svyazinvest, has brought two Russian ministries into conflict. The Telecommunications ministry says the company should be privatised, but the Economy Ministry wants to merge it with its regional branches.

The re-organisation of Svyazinvest has become an issue of a heated debate between the two ministries.

“An operation like that is rather difficult to fulfil given the interests of the seven different regional companies that form Svyazinvest. It will also lead to a monopolisation of the market, meaning any competition would be stamped out, and prices could rise while product quality falls,” claims one of the rivalling executives, Telecoms Minister Leonid Reiman.

Some analysts say the telecom minister's comments confirm that plans to create an operational company by merging Svyazinvest with its regional branches are in the early stages.

“The any result will be sort of gazpromisation of the telecom sector because then you could see how this company could basically dominate the market,” says Aleksandr Kazbegi, head of Telecom Research.

Ministers representing the two viewpoints will discuss the Svyazinvest issue next January.

Although, analysts say the privatisation is unexpected this side of the 2008 presidential elections.