3G licence tender launched – auction to be completed in February

10 Dec 2014

Ukrainian telecoms regulator NCCIR reports on its website that it decided to launch the long-awaited tender for three 3G UMTS mobile licences at its meeting of 9 December 2014, subsequent to which it is publishing an advertisement for prospective bidders to enter their proposals alongside final conditions of the tender and other related documents, in Ukraine’s Official Gazette and on the regulatory site. The announcement set a 16 February 2015 date for the licence auction, which is understood to be the date on which the winners will be revealed. According to ProIT, the NCCIR will accept 3G licence bid applications from 15 December to 15 January, while the minimum bid price for each licence under the terms of the tender is UAH2.7 billion (USD171 million), although the total cost of the conversion of UMTS frequencies from military use – UAH1.6 billion – must be divided equally among the winners and added to the basic licence acquisition fee. Under the licence conditions, all regional centres of Ukraine must be covered by 3G network services within 18 months from receipt of concession. The government reserves the right to reject applications on the basis of applicants’ association with individuals/companies on Ukraine’s economic sanctions list (related to Russian-backed separatists in the east of the country), and it should be noted that the law on sanctions could apply to a company post-licensing, resulting in its licence being revoked.

Ukraine’s cellular market leader Kyivstar, owned by Russian-backed Vimpelcom, is currently carrying out a detailed study of the 3G tender conditions, before putting the decision on a potential licence bid to its shareholders, its director-general Peter Chernyshov was quoted as saying by Ukrainian News. Second-ranked cellco MTS Ukraine, part of Russia’s Mobile TeleSystems (MTS), was similarly quoted in local press as saying it will review the 3G tender, making a detailed study of the tender conditions before it reaches a decision on whether to bid. A spokesperson for third-placed cellco Astelit (Life:)), jointly owned by domestic conglomerate SCM and Turkey’s Turkcell, said the company is currently analysing the situation, and did not issue a conclusive statement on whether it would place a bid, while noting that a high starting price for licences increases business costs and reduces the overall investment attractiveness of 3G rollout in Ukraine. SCM’s subsidiary Ukrtelecom is currently the sole UMTS 2100MHz licensee in Ukraine. It has also been reported that CDMA operator Intertelecom is mulling an UMTS bid.

In a related detail, last week the NCCIR cancelled a ‘useless’ 5MHz unpaired 3G spectrum block belonging to Ukrtelecom, which operates the country’s only UMTS mobile network under the TriMob banner with 2×15MHz 2100MHz bandwidth, but the additional nationwide 5MHz allocation had never been utilised.