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Ukraine Telecommunications Report Q3 2010
Business Monitor International, July 2010, Pages: 99
This Ukraine Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Ukraine's telecommunications industry.
This Q310 report on Ukraine’s telecommunications market incorporates new operator data for the first three months of 2010. The latest set of figures suggests that the mobile subscriber base shrank by 0.1% in the first three months of 2010. This followed on from the 0.8% shrinkage in customer numbers that occurred in 2009. In addition to the existence of a highly saturated market, mobile growth in 2009 was affected by the country’s weak economic climate. Furthermore, Ukraine’s mobile operators have been engaging in the mass deduction of inactive prepaid customers from their reported totals. In the first quarter of 2010, it was second-ranked MTS that saw the steepest loss of customers, with the operator reporting the deduction of 214,000 customers. By contrast, market leader Kyivstar saw a net loss of 88,000 customers in Q110 while VimpelCom experienced a loss of 54,000.
In May 2010, it was announced that Ukraine’s Anti-monopoly Committee was re-examining Kyivstar’s planned merger into Russia’s VimpelCom in response to complaints from rival Ukrainian cellco Astelit. Despite this news, Kyivstar’s former parent company Telenor and VimpelCom have both proceeded to implement the terms of their merger agreement. Telenor no longer reports financial and operational data for Kyivstar. Instead, VimpelCom has begun reporting data for the operator and plans to integrate the data for its Ukrainian operations in its next financial quarter. We now predict that Ukraine’s mobile subscriber base will shrink by around 0.5% in 2010, as the leading operators continue to shed inactive customers. Although we believe that the market could see a return to growth in the latter years of our forecast, we expect this growth to be minimal.
Now that mobile subscriber growth is slowing, the authors expect the Ukrainian operators to turn increasingly to mobile data and internet services as a way of generating revenues and combating churn. Although incumbent operator Ukrtelecom is currently the only operator with a licence to offer UMTS-based 3G services, other operators have begun offering 3G services based on other technologies. Nevertheless, there are signs that the long-awaited issuance of 3G licences could finally be in sight. In April, it was reported that Ukraine’s regulatory authorities were planning to auction three 3G mobile licences in autumn 2010. It appears that the regulator now favours the simultaneous issuance of three concessions; this is seen as a way of avoiding the emergence of an unfair competitive situation.
In addition to the announcement that 3G licensing may be imminent, Ukraine’s new government has recently outlined another plan to privatise Ukrtelecom. The government reportedly intends to sell its entire 92.79% stake in the company. Although we welcome the announcement, we caution that investors will want to tread with caution, given the operator’s history of failed privatisation attempts and the uncertain policy and regulatory environment in the country's telecoms sector.
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