OREANDA-NEWS. April 20, 2011. Ukrtelecom, the dominant landline operator, has initiated massive lay-offs having already dismissed 4.4 th employees in 1Q11, the reputable Ukraine’s source Kommersant reported Apr 20. Apart from staff downsizing new Ukrtelecom owner EPIC also intends to lower opex through shutdown of loss-making telco services, specifically local telephony, wire radio and telegraph services, a managing partner of Austria's EPIC Peter Goldscheider announced at the press-conference held on Apr 19. He also assured the current Ukrtelecom CEO, Georgy Dzekon, will retain his post.

Millennium Capital deems the stream of news is POSITIVE for Ukrtelecom. Though Millennium Capital expected the operating conditions would become much easier for the company given the stance of the new true owners, we could not expect the management to be so shameless. The company is not yet even formally transferred from under the government ownership, but the new owner is already talking on modifications to initial obligations under privatization agreement and, moreover, has set on massive lay-offs to spare itself of necessity to set aside the cash on high severance pays to employees implied by the privatization contract. We do not like the restructuring mode chosen by the management but admit it may prompt sharp earnings rebound in the near-term. Unsurprisingly, the likelihood is high that the new owner will enjoy the full support from the government in all major initiatives regardless of the fact that they go against the privatization terms.