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MPs protest telecom privatization

  • 1999-02-04
  • Rebecca Santana
TALLINN - While the cat's away, the mice will play. As the Eesti Telekom representatives were pitching the initial public offering to international investors, some members of Parliament mounted an unsuccessful campaign to halt the privatization process.

Twenty-three MPs signed a bill to change the telecom privatization terms and give the state a 51 percent share in the enterprise. Although the Parliament later rejected the bill, the damage, said government officials, had already been done.

Under the telecom reorganization, the state's share in Eesti Telekom will drop to 27.3 percent and two Nordic companies, Sonera and Telia, will own 49 percent of the reorganized company. They are already major investors in the state-owned company. The sale of the remaining shares began Jan. 25 and will conclude on Feb. 9.

The sale is expected to raise billions of kroons for Estonia, more than double the size of the Tallinn Stock Exchange and possibly raise Estonia's stature among international investors. The team managing the initial public stock offering left on a 25 city, world tour to entice foreign investors into buying shares.

Parliamentarians who signed the petition, criticized the government's role in the privatization and said that taking the enterprise out of the state's control would hurt customers.

"The authors of this proposal or petition see it necessary to guarantee state control and further considering of national interests in Eesti Telekom after the mentioned public offering. Therefore, the state must maintain their 51 percent majority in Eesti Telekom," wrote the authors of the bill in a statement.

Minister of Transport and Communications Raivo Vare, who was with the team in Scandinavia at the time the petition was publicized, harshly criticized the parliamentarians' actions.

"The damage done with this proposal is indispensable. Simply the fact that the proposal is being discussed will deprive us of hundreds of millions of kroons," said Vare to the business daily Aripaev.

But by Jan. 28 the political winds shifted once again. As the telecom team was drumming up business in England, Parliament voted 24 to 14 in favor of abandoning the bill.

Whether this is the end or not remains to be seen. MPs said that the bill may come up again when Parliament reconvenes on Feb. 8, while the telecom team wraps up its tour in Amsterdam and Paris.

Not all who signed the petition agreed that the state should retain a majority control in the telecommunications enterprise. But many said the government was reticent with information about the reconstruction and shares allotted to Sonera and Telia. When that information became available, it was much too late.

"The problem here, in the case of privatization of telecom, is there is very little openness in this procedure," said Daimar Liiv who was one of six Reform party members who signed the petition. "It raises questions about the honesty of those involved."

Others complained that the shares issued to Sonera and Telia would give them monopolistic control of a strategic enterprise.

"It is not competitive in Estonia," said one signatory, Ignar Fjuk.

The so-called "golden share" which the government will retain and is supposed to protect Estonia's interests, is not enough, said Liiv. The share would give Estonia veto power but it wouldn't be able to guide the company's future, said one parliamentarian.

"All real governing of the company is out of real control," said Liiv.

The telecommunications privatization process has been under way for months and these questions should have been raised last autumn, said parliamentarians who didn't sign the petition. By attacking the reorganization the day after the initial public offering was launched, they will hurt investor confidence in Estonia and drop the share price.

"The timing was very wrong. These politicians who did it, should have done it last autumn," said Ants Jarvesaar from the Rural Union Party. He said that this effort was just another twist in the rocky road to the March 7 elections and Toompea Castle.