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State should take time privatizing Svyazinvest - govt. official - 1

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ST. PETERSBURG, June 14 (RIA Novosti) - The head of Russia's government staff said Wednesday that the privatization of the giant Svyazinvest telecoms holding should not be rushed.

"I think that it would not be worth the state's while to hurry the privatization of a company such as Svyazinvest," Sergei Naryshkin told reporters at an international economic forum in Russia's second city.

The Russian Federal Property Fund holds 25% minus two shares in Svyazinvest, with 50% plus one share belonging to the Federal Property Management Agency and the remaining block held by Cyprus-based Mustcom Ltd.

But a deputy head of the Information Technologies Ministry said it would be pointless putting the privatization on hold after issues connected with providing the military and security services with communications services were resolved.

"Svyazinvest's privatization is in principle technically and technologically possible," Dmitry Milovantsev said, commenting on Naryshkin's earlier statement. He added that the decision did not depend on his ministry.

"There are objective problems now that are holding back this process," he said. "First of all, these are issues due to an unregulated situation with providing services to special consumers."

Milovantsev said the interests of such consumers - the military and security services - should be protected during the switch to a competitive market.

"When these issues are resolved, competition on the very competitive telecommunications market should be restrained no longer," he said.

Svyazinvest controls 51% in Rostelecom, Russia's largest long-distance telecom services provider (RTS: RTKM), and has a minority interest (28%) in Moscow City Telephone Network (RTS: MGTS).

Russia's information technologies minister said June 6 that parliament could pass a bill necessary for the privatization of Svyazinvest in the next six weeks.

The bill sets out how the rights of the military and security services will be protected - something Russia's Security Council has insisted on - if the privatization goes through.

"The bill is currently in the State Duma [parliament's lower house]," Leonid Reiman said. "I spoke with deputies and they promised it would be adopted at the spring session."

The session ends on July 16.

Russia's economics minister said Wednesday that the privatization of Svyazinvest would probably not take place this year.

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