Ukrainian bank sets up MVNO venture with wireless struggler WellCOM

11 Jan 2005

One of Ukraine’s leading banking institutions, Privatbank, has announced the creation of a new mobile virtual network operator (MVNO) in conjunction with one of the country’s smallest operators Ukrainian Radio Systems (WellCOM). Privatbank’s new service, launched at the beginning of this year under the brand name Privat, is a first for Ukraine and will use WellCOM’s GSM-900 network to provide wireless services using handsets supplied by Samsung. More importantly, it could prove a useful lifeline to the ailing cellco which has maintained its operations despite considerable turmoil in recent years. Ukrainian Radio Systems, which has offered GSM-900 services under the brand name WellCOM since October 1998, became embroiled in a long-running legal dispute with the Ukrainian telecoms regulator over the revocation of its licence which ultimately led to the withdrawal of a major investor, South Korean firm Daewoo Telecom.

Ukraine’s mobile market is dominated by two operators, UMC and Kyivstar, which between them controlled over 98% of all subscribers by the end of September 2004. At that date the number of wireless users had reached 10.57 million, up from 6.54 million nine months earlier, a cellular penetration rate of 21.87%. In stark contrast to the big two, the country’s other three operators Golden Telecom (Ukraine), DCC (Astelit) and URS (WellCOM) have struggled to make an impact in a market which generated revenues of over USD650 million in 2003, up from USD500 million a year earlier, making it the most active sub-sector of Ukraine’s telecoms industry. WellCOM had only signed up around 45,000 subscribers by the end of September, which though 5,000 higher than at the start of the year, was still only 0.4% of the market. Nonetheless, the cellco’s future now looks more certain. It received new backers in January 2003 when two Cypriot companies, Varkedge Ltd and Ukrfaundcinvest, and Ukrainian firms Interinvest and Occidental Management became shareholders after Daewoo sold its entire 49% holding. The new ownership was mirrored in a change in direction and ambition and in April that year URS announced plans to roll out mobile services nationwide in accordance with its GSM concession. The expansion project, which was completed in April 2004, saw services deployed to Dniepropetrovsk, Odessa, Nikolaev, Kharkov, Zaporozhie, Donetsk, L’viv, Zhytomir, Chernigov, Poltava, Krivoy Rog, Rivne, Genichesk, Herson and Melitopol, Simpheropol, Yalta, Sevastopol, Alyshta and Eupatoria in the Crimea.

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