Rostelecom faces claims for 3.5 billion

government and business

Yesterday, OJSC Rostelecom reported receiving tax claims in the amount of 3.47 billion rubles. (about $130 million). This is a record amount for Svyazinvest enterprises, but the market calmly responded to the actions of the tax authorities. Analysts note that in the case of subsidiaries of a telecommunications holding, tax authorities have never been able to prove the validity of their claims in court.

As Rostelecom reported yesterday, tax claims for 2003 were brought against the company by Federal Tax Service Inspectorate #7. The total amount of claims is 3.47 billion rubles, of which 2.18 billion are unpaid, according to the Federal Tax Service, taxes, 1.29 billion rubles are fines and penalties. Representatives of Rostelecom stated that they do not agree with the claims of the Federal Tax Service and intend to challenge them in court. Federal Tax Service Inspectorate #7 refused to talk to a Kommersant correspondent about tax claims against Rostelecom.

Experts note that the claims brought against Rostelecom are similar to those previously made against other subsidiaries of the Svyazinvest holding: OJSC Dalsvyaz (the amount of claims amounted to 718 million rubles for 2001-2002), Southern Telecommunications Company (917 million rubles for 2002-2003) and Center Telecom (2.35 billion rubles for 2002-2003). In all cases, they relate to mutual settlements between Rostelecom and telecommunications companies. Until mid-2003, these calculations were made on the basis of a methodology approved by the Ministry of Aviation Administration, the Ministry of Communications and the Government of the Russian Federation. When paying for the transmission of telephone traffic, Rostelecom and telecommunications companies used mutual offsets. According to the tax authorities, this was illegal; According to their version, Rostelecom would have to receive all the fees for calls originating from its network in the local communications network and pay taxes on the profits received.

OJSC Rostelecom is the Russian national operator of long-distance and international communications. 51% of the company's shares belong to the Svyazinvest holding. The company's revenue in 2005 amounted to 40.29 billion rubles, profit before tax - 12.16 billion rubles, net profit - 9 billion rubles. The NYSE-traded company's market capitalization was $3.39 billion yesterday.

The tax claims brought against Rostelecom are a record for Svyazinvest companies and the second largest in the history of the Russian telecommunications industry. Significant claims were made against signalmen only once. At the end of 2004, the cellular company VimpelCom received an invoice from the Federal Tax Service for $157 million. Nevertheless, there was no collapse in Rostelecom share prices on the stock market. On the NYSE by 19.00 Moscow time, ADRs for the company's shares fell by 2.4%. On the MICEX, ordinary shares of Rostelecom rose by 1.2%, preferred shares by 0.4%.

Analysts explain the calmness of investors for several reasons. Firstly, representatives of Svyazinvest have previously repeatedly stated that tax claims regarding mutual settlements can be brought against all companies of the holding. “Secondly, other companies have not yet paid the Federal Tax Service a penny. Moreover, Dalsvyaz has already managed to challenge the tax authorities’ claims in several courts,” says Nadezhda Golubeva from Aton. “It is unlikely that Rostelecom will have to pay the bill in full".

Some market participants have suggested that behind the tax claims against Rostelecom and other Svyazinvest enterprises is not so much the intention of the Federal Tax Service to comply with the Ministry of Finance's standards for filling the budget by any means, but rather the desire of the state to gain additional leverage over the heads of the holding's subsidiaries. “Before the upcoming privatization, the state would like to insure against abuses, for example, the sale of individual attractive assets,” suggests Alexander Malis, senior vice president of the Corbina-Telecom company. “Tax claims are a good tool of pressure; the case can be allowed to proceed or not, depending on the manager's behavior. Every manager will now know that if he resigns, he may face not a transfer to another job in the industry, but criminal prosecution for tax evasion on an especially large scale."

VALERY KODACHIGOV

Tax authorities are monitoring outgoing