3G licensing back on track? Government approves new plan to convert military frequencies

12 Nov 2009

Ukraine’s Cabinet of Ministers yesterday passed a new procedure for the conversion of wireless frequencies in the 2.1GHz UMTS band, currently held by the Defence Ministry, for the provision of commercial 3G mobile services, Serhiy Kolobov, the head of the National Communications Regulation Commission (NCRC), told Interfax-Ukraine, as quoted by the Kyiv Post. He said the ‘final’ government resolution foresees the fulfilment of the conditions put forth by the Defence Ministry, which demanded UAH2.5 billion (USD311 million) be allocated to finance the conversion. Kolobov said: ‘They will get the requested amount, but it will happen in 2010-2014. Some of the funds will be allocated from the sum to be received from the sale of [3G] licences, and part will be financed through current programmes.’ NCRC member Volodymyr Oliynyk was quoted as saying that the ministry should receive around UAH900 million in 2010 alone under the new conditions.

The government previously instructed the NCRC to hold a 3G licence tender via resolution No. 1119 of 16 September 2009, which approved the procedure for the conversion of frequencies, using funds from the Defence Ministry, the Transport and Communications Ministry, and the regulator. The document effectively cancelled a resolution issued by a previous administration in the summer of 2007 on spectrum conversion using funds from operators that received 3G licences.

The NCRC called a tender to issue licences, initially offering operators a chance to bid for one 15-year 25MHz licence at a starting price of UAH400 million (USD50 million), with lower bandwidth concessions to follow. The commission set the tender date as 30 November 2009, and was to accept bids until 26 October. However, on 20 October Ukrainian president Viktor Yushchenko suspended the September 2009 resolution, apparently at the request of the military, and asked the Constitutional Court to check the legitimacy of the resolution. The move was the latest in a long-running series of presidential actions to scupper the plans of Yushchenko’s political rival, Prime Minister Yulia Tymoshenko.

The NCRC, without suspending the tender, which attracted bids from three domestic mobile operators – Kyivstar, MTS Ukraine (UMC) and Astelit LLC – decided to negotiate new conditions with senior defence officials. The last option under discussion suggested the allocation of 30% of the sum earned from the sale of 3G licences to be handed to the military, according to the Kyiv Post report.