Alexander Kardakov
Does a millionaire really lose his assets?
On the afternoon of April 12, Ukrainian media reported that millionaire Alexander Kardakov (number 97 on the Forbes list of the country's richest people, with a net worth of $27 million) had begun liquidation proceedings against one of his companies, Inkom. The reason for this was allegedly the company's large debts to creditors. However, by the afternoon, Kardakov, as well as the press service of the management company OctavaCapital, denied all rumors surrounding Inkom's difficult situation and stated that only one of the brand's subsidiaries would be subject to liquidation. Forbes investigated the real situation with the business of one of the country's first IT millionaires.
According to Octava Capital representatives, the company is currently liquidating only the Information Computer Systems division of PJSC, which sold the packaged business and training courses. "It would be incorrect to talk about liquidating the entire business now; we are only closing this division," the company's press service clarified. Kardakov himself noted that the division is no longer generating the same income as before, and nothing will change in the future: while ICS previously accounted for approximately 30% of Inkom's revenue, its current figures have fallen severalfold. The reason for this is the crisis in the Ukrainian market.
The Ukrainian market has suffered a significant downturn. The crisis has affected all industries, and Inkom's business is no exception, says Anatoly Frolenkov, partner at Expert & Consulting.
Despite the fact that only one division is being liquidated, Octava Capital confirmed the restructuring of Inkom's entire business. They promise to enter the market with new products by the end of 2016. As experts note, the situation could not end with the liquidation of just one company in the current reality. "The integration business (one of Inkom's areas of activity – Forbes) has been in decline for a long time. Today, integrators are forced to reconsider their strategy because the market is oversaturated," notes Oleg Stefanyuk, Director of SV Consulting. "The Ukrainian market has significantly declined. The crisis has affected all industries, and Inkom's business is no exception," adds Anatoly Frolenkov, Managing Partner of Expert & Consulting.
The difficult market situation was further exacerbated by Inkom's previously unpaid debts. Octava Capital representatives emphasize that the company has already signed all the dispute resolution agreements, and this matter should be resolved soon. However, interviewed representatives of VTB and UniCredit Bank stated that there are currently no debt settlement agreements with Kardakov. "The information about Inkom settling its credit issues with UniCredit is false; the debt has not been repaid, and the bank plans to initiate legal proceedings," a source at the bank told Forbes. "We have developed a mechanism and signed settlement agreements. But the process itself will take several months," Kardakov commented on the banks' statement.
Why are people talking about this now?
Inkom's difficult situation began long ago. Some point to 2014, when the crisis began, as the starting point; others point to last year, when the Ukrainian market finally hit its nadir. The company was unprepared for this turn of events. According to one Forbes source, Inkom had previously invested heavily in innovative developments, attempting to find a new niche, which only led to accumulating debt to creditors. The triple devaluation of the national currency has forced Kardakov to focus on restructuring rather than business development. Octava Capital reported that the updated development plan will be presented by the end of this year. This naturally raises the question: why did Inkom's problems only become known in April 2016, if the company's economic difficulties arose much earlier?
Kardakov claims that "evil tongues" are to blame for everything, and that what's happening is nothing more than an image attack on him personally and his business. However, not all market players agree with this assertion. One of Forbes' sources said that the entrepreneur is using this method to promote his future projects. "Judge for yourself: news about Inkom's problems is nothing new, the company has been experiencing difficulties for a long time, and yet an interview about the state of affairs was given to only one publication, and only now," the source noted. Alexander Kardakov was unable to speak with a Forbes correspondent at the time of writing; his representatives cited his manager's busy schedule.
Besides the troubled Inkom, Kardakov also owns the quite successful telecommunications company Datagroup, which he personally took over as CEO several months ago (a decision prompted by a conflict with management). One of the company's former managers assured Forbes that the company's financial position is sound, with no major debts or overdue payments. Datagroup is currently a leader in several areas: VSAT satellite communications and transit traffic. The company also operates its own retail broadband network.
Kardakov and his business are one and the same. As soon as he can restructure the loans, he can begin reforming the company, says Oleg Stefanyuk, director of SV Consulting.
According to last year's Forbes ranking of residential internet providers, the company ranked sixth by subscriber base (over 220,000) and fourth by ARPU among its competitors. "Datagroup currently has a strong market position, and most importantly, it has room for growth. For example, EBITDA is around 30%, but for some telecom operators, it reaches 40%. This means the company has room to grow," explains Frolenkov. According to the expert, everything now depends on whether the company can develop compelling offers for its clients. And whether the new management can leverage the expertise of Datagroup and Incom to develop services and sell them to clients to increase revenue. Some progress has already been made in this direction: Datagroup is preparing to launch products using cloud services.
According to unconfirmed reports, Kardakov may sell part of his stake in Datagroup to the investment fund Horizon Capital. The businessman denies the possibility of a deal, and the fund declined to comment on the information, but confirmed that they plan to expand their operations in the future. One of Forbes' sources noted that increasing Horizon Capital's stake in Datagroup would run counter to the fund's development strategy. "Currently, they're focused on IT and the agricultural sector, which they've openly stated many times. Telecom isn't exactly their specialty. But if they buy an additional stake, the move would be understandable: given the current situation in the country, the price of the asset will be minimal," Forbes reported.
"Kardakov and his business are one and the same. He's the owner and can do what he sees fit," Stefanyuk adds, pointing out that Inkom's business hasn't been in the best shape for a long time. "As soon as he can restructure the loans, we can begin reforming the company. I'm confident he's up to the task," the expert concluded.
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