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Government could sell stake in Moscow's MGTS, official says

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ST. PETERSBURG, June 14 (RIA Novosti) - A government official said Wednesday the government could be willing to consider a new offer from Comstar UTS telecoms holding for a stake in Moscow City Telephone Network (RTS: MGTS).

Government staff head Sergei Naryshkin said the government was likely to allow state-owned telecoms holding Svyazinvest to sell its minority stake in the Moscow fixed-line phone monopoly if Comstar UTS announced a third bid.

"I believe an offer for MGTS will be made for the third time, and the government could allow Svyazinvest to sell its stake in MGTS," Naryshkin said.

Comstar UTS, which already holds a controlling stake in MGTS, made an offer in mid-December to buy the remaining shares in the fixed-line operator at 490 rubles (about $17.13) per share. A second offer to buy up common shares from minority shareholders in the Moscow fixed-line telephone company, also at 490 rubles ($17.50) per share, was made in March this year.

Earlier, information and communications minister Leonid Reiman said the price offered by Comstar United TeleSystems, in which leading Russian consumer services firm Sistema owns a majority stake, was fairly good.

But Comstar UTS general director Semyon Rabovsky earlier said the company did not intend to make a third offer to repurchase MGTS' minority stake from Svyazinvest. He said the issue could be solved through negotiations, if the government failed to decide on allowing Svyazinvest to sell its holding in MGTS before the expiry of the second offer.

Svyazinvest, which holds 28% of voting shares in MGTS, has not responded to the offer because government representatives on the company's board of directors failed to decide on the issue in the absence of a government resolution. The latest offer expired on May 17, but the government had not decided on selling its stake in MGTS.

The Svyazinvest board of directors then made a decision to valuate its stake in the Moscow phone operator. Deputy Information and Communications Minister Dmitry Milovantsev said Wednesday the valuation could be completed in late June.

"The process of valuation is under way. It will be completed in the next few days. The stake is being valuated by specialists from [British company] PMG," Milovantsev said.

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