Udinet

cancelled

Udinet was created to operate national and international long distance services as well as to modernize and develop the Uzbek telecom network in April 1996. The company was formed as a joint venture between state-owned Uzbektelecom (51%), Italian company STET (37.4%) and Siemens (8%). Initially the agreement between the Ministry of Communications and the foreign partners was established for 15 years, including 9 years of Udinet's monopoly in long distance services. The joint venture assumed the ownership of existing long distance infrastructure for the agreement period. The agreement was then open to extensions. The company's initial capitalization was US$30 million in May 1996. Stet committed to run the company and had planned to invest US$150 million before 2000. Siemens had committed to invest US$50 million. The investment by the foreign partners was planned to be used to build digital exchanges in 12 regions of the country with fiber optic and radio relay lines in order to develop the republic's international and inter-regional telephone network. Despite agreements with the Posts and Telecommunications Agency of Uzbekistan (which since 1997 had been the regulatory and licensing body in Uzbekistan), Stet and Siemens pulled out of the project in 1998. The foreign partners disputed the US$240 million valuation for the long-distance infrastructure that had been the Uzbekistani contribution to the deal and also the prospects for the venture enjoying exclusive rights for long-distance and international telephone services. Subsequent attempts to sell the Telephone Network were initially unsuccessful. None None