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Government to raise price for stake in Moscow phone operator

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MOSCOW, June 21 (RIA Novosti) - The government will sell its stake in Moscow City Telephone Network (RTS: MGTS) at a price higher than that offered by Comstar UTS telecoms holding, a government source said Wednesday.

Earlier reports 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.

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.

Svyazinvest 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 value its stake in the Moscow phone operator.

"The assessment must be higher than the initial offer," the government source said, adding that Svyazinvest's stake in MGTS was currently being valued.

The source said the government expected a third offer soon after valuation was completed.

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