NEWSMAKER-Russia's telecoms tsar returns to Svyazinvest

MOSCOW, June 30 (Reuters) - Russia’s former telecom minister, Leonid Reiman, a powerful bureaucrat and moderniser of state telecoms but a controversial figure in corporate circles, will return to state service as Svyazinvest’s board chairman.

The state telecoms holding voted on Tuesday to have Reiman return to the post of chairman of the board. [ID:nLU877181]

Reiman led the consolidation of about 80 state telecoms firms into Svyazinvest in the early part of the decade.

He will now preside over fresh reforms aimed at making the state telecoms giant a credible player on a competitive field and possibly even rival private mobile phone players, such as Vimpelcom VIP.N and MTS MBT.N.

The government last month cleared the reorganisation of Svyazinvest to improve its operations and to stop it from losing market share to leaner commercial players. [ID:nLC804981]

“(Reiman’s) knowledge of the industry and its key people as well as the political aspects of such a strategic restructuring, is likely to speed up the consolidation process, in our view,” VTB Capital analyst Viktor Klimovich said.

Reiman, a career telecoms expert, served an almost unbroken eight-year term as Svyazinvest chairman between 2000 and 2008, which almost fully coincides with Vladimir Putin’s term as president.

An old associate of Putin, Reiman brought foreign investors into St Petersburg’s telecoms industry in the 1990s, when Putin was in charge of the city’s foreign relations as deputy mayor.

Putin’s wife, Lyudmila, briefly worked for Telekominvest, a vehicle for foreign investment founded by Reiman when he was head of St Petersburg Telecom, Russian media have reported.

Unexpectedly, Reiman was not reappointed to cabinet when Putin became prime minister last year and he left the Svyazinvest chairmanship in a government reshuffle in 2008.

However, he was appointed aide to newly elected President Dmitry Medvedev, leaving analysts guessing about Reiman’s influence.

Reiman may have staked out a role as moderniser of the Soviet-era state telecoms system, but there have been complaints from private industry about his role in the regulation of the telecoms market.

Private industry players, especially in wireless, have complained they face regulatory hurdles such as licencing delays and poor access to cellular frequencies.

In one of the most controversial episodes in the telecoms industry in the early part of the decade, a Swiss tribunal, reviewing the sale of a stake in Russia’s No.3 mobile operator Megafon to Russia’s Alfa Group, ruled that Witness No.7 in the case was the beneficial owner of IPOC, an investment fund with 8 percent of Megafon.

Witness No.7 was not named but was identified as the chairman of the board of directors in Svyazinvest in 2001.

Reiman, who was both communications minister and chairman of the Svyazinvest board in 2001, consistently denied he owned IPOC. (Reporting by Maria Kiselyova; editing by Karen Foster)