Ukrtelecom selling cellco in six months, USD200m minimum targeted

16 Jun 2011

Recently-privatised Ukrainian telco Ukrtelecom has confirmed a previously mooted plan to sell its 3G mobile network operations, which it expects to finalise in three-to-six months. News agency Interfax-Ukraine cited a decision of the national PSTN operator’s shareholders to offload the mobile division – which holds a monopoly on infrastructure-based UMTS services in Ukraine – and invest the proceeds into much-needed fixed broadband and telephony network improvements, including triple-play development. Ukrtelecom’s supervisory board will now consider the shareholders’ decision before proceeding with the sale, which, according to local newspaper Delo, is expected to raise no less than UAH1.6 billion (USD200 million), or a quarter of the net asset value of Ukrtelecom at the end of 2010.

The sale will require a spin-off of all mobile-related assets into a new legal entity, confirmed Yurii Kotliarov, head of Ukrtelecom’s legal department. TeleGeography’s GlobalComms notes that the telco’s internal Utel branch responsible for mobile services was restructured into its current form in 2005, having previously provided services including fixed long-distance telephony. It consists of seven regional centres of mobile communications in Kyiv, Dnipropetrovsk, Lviv, Odessa, Kharkiv, Donetsk and Simferopol, as well as a technical/research department. Commercial 3G mobile services were launched in November 2007, but growth has been slower than expected, although reaching 674,000 subscribers at the end of March 2011. The ‘U’tel’ mobile telephony brand was dropped in March 2010 but the ‘U’ prefix was kept for a range of voice and value added services, alongside a relaunch of mobile internet services under the ‘OGO’ brand already used by the telco for its fixed broadband services, replacing the ‘U’net’ banner.

Ukrtelecom’s Austrian-backed owner Epic Services Ukraine (ESU), which completed the firm’s purchase in March, has indicated that it will resell the entire company, but after a four-to-five-year development and restructuring programme, including the sale of the mobile division. The Ukrainian incumbent ended an original excursion into the mobile market in 2002 when it agreed to sell a controlling stake in GSM operator UMC (now MTS Ukraine) to Russia’s MTS for USD172 million.

Ukraine, Ukrtelecom (incl. TriMob)