3G arrives in Ukraine

6 Nov 2007

Ukrtelecom has launched commercial 3G mobile services over a W-CDMA network covering Ukraine’s six largest cities, under the Utel brand. The state-run fixed line incumbent, and sole UMTS licensee, switched on the long-awaited service last week in Kyiv, Kharkiv, Dnepropetrovsk, Donetsk, Odessa and Lviv. The move marks Ukrtelecom’s return to the mobile market after selling GSM operator UMC to Russia’s MTS in 2002. At launch, the company had invested around USD150 million in 3G network development, and it plans to invest a further USD146 million in its W-CDMA services by the end of next year. Its management has promised that the first phase of the network will be fully implemented by the end of this year with around 600 base stations in operation. By that date Ukrtelecom hopes to have 10,000 3G subscribers, and it expects the user base to expand to around 500,000 in the first two years of operation, with monthly ARPU anticipated at around USD16-USD17. Russian newspaper CNews quotes regional analysts with differing opinions on the former wireline monopoly’s prospects in the 3G market, with Irina Astafieva of J’son & Partners saying: ‘I believe the expectations regarding the subscriber base expansion are overestimated by 30%-40% – 500,000 is 1% of the Ukrainian population. But the living standards in the republic are lower than in Russia, where, [according to forecasts], 3G penetration in the first two years of 3G network implementation amounts to only 0.6% of population.’ However, the paper also polled more positive opinions from analysts including Tatian Tolmacheva of iKS-Consulting, who pointed to opportunities for Ukrtelecom to take advantage of 3G mobile and fixed line network convergence, and steal the high spending corporate customers of the country’s CDMA fixed-wireless providers, some of which offer 3G-speed wireless internet/data services. According to Tolmacheva: ‘The company is entering the segment occupied by the Ukrainian CDMA companies, which are regarded as the so called ‘second handset operators’ and [add] about 20,000 new users monthly. Ukrtelecom…is quite able to subscribe the same number of users.’

Ukraine, Ukrtelecom (incl. TriMob)