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Research by Country/Region January 22, 2018  
TELECOMMUNICATIONS MARKET SNAPSHOT: UKRAINE

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Key Statistics
Population45,994,288 (July 2008 est.)
GDP $140.5 billion (2007)
Per capita GDP $1,750 (2005)
Telecom revenue$ 3.2 billion (July 2006)
Main lines12.858 million (2007)
Main line Penetration 30% (2005)
Mobile subscribers55.24 million (2007)
Mobile penetration88.3% (2006 est.)
Internet users10 million (2007)
Internet User Penetration12.2% (2005)
Broadband Subscribers50,000 (2005)
U.S. equipment exports to market$4.5 million (2005)
Sources: CIA World Factbook, Primetrica, USITC, and Business Monitor International

Market Overview

With the second largest population in Europe, Ukraine is one of the most underdeveloped markets for information and communications technology (ICT) in Europe. According to the Ukrainian Ministry of Transport and Telecommunications (MTT), by the midpoint of 2006, total revenues for the telecommunications market were approximately $3.2 billion. One of the main impediments to the markets development and growth has been the delayed privatization of the government owned incumbent operator Ukrtelekom. Mainly a result of political instability, the slow process to fully privatize the incumbent operator has delayed the upgrading of the fixed-line network infrastructure, and inhibited the mass deployment of wire-line telephone and data services.

The highlight of the Ukraine telecom industry is the mobile and wireless sector. There are over 41 million mobile phone subscribers in Ukraine. The mobile market is a highly competitive and quickly evolving environment. Most of the coverage is still concentrated in major urban centers, but wireless carriers are aggressively investing in infrastructure to achieve countrywide service coverage and deliver value added services over next generation networks. Additionally, merger and partnership activity has been high throughout 2005 and 2006 as domestic and foreign investors attempt to establish stronger competitive positions.

If the government of Ukraine can achieve sustainable stability, the Ukrainian telecom market should emerge as one of the most attractive in Europe. As the investment in new equipment continues, and the remaining government shares of Ukrtelekom are eventually sold, Ukraine presents significant business opportunities throughout the ICT industry.


Mobile and Wireless Networks

With a penetration rate of over 88%, the mobile telephony market is the strongest sector in the Ukrainian telecom industry. Additionally, the issuance of 3G and WiMax licenses will further enhance the rapid growth and development of the wireless sector. Even though the Ukrainian government has been slow to fully privatize Ukrtelekom, the wireless sector has developed into an intensely competitive market and the most progressive in bringing next generation services to the market.

The mobile telephony market is fairly segmented. The major players are Kyivstar, UMC, and Astelit, controlling approximately 45%, 42%, and 11% respectively. Golden Telecom Ukraine and URS control the remaining shares of the market. For most of the major operators, the prepaid customer segment dominates the customer base. It is anticipated that the wireless carriers cannot effectively push new value added services until the prepaid customer base is converted to post-pay contracts.

Nevertheless, the wireless sector is aggressively deploying infrastructure to deliver broadband services over next-generation networks. Five licenses are expected to be issued for WiMax services in late 2006. Also, all the major operators are investing in their networks to deliver 3G data and telephony services. The aggressive new investments will further solidify the wireless sector as the leader of Ukraine’s telecommunications market.

Fixed-Line Network and Service Market

The fixed-line market in Ukraine is still dominated by the government owned incumbent, Ukrtelekom. Through Ukrtelekom and its subsidiaries, the government maintains control of 99% of the local, DLD, and ILD markets. Political instability has been a main factor in the delayed sale of the governments 93% stake in the incumbent, and has undermined the ability of the company to upgrade and expand the network to offer new services to wider areas of the country. Even though the fixed-line market did grow by 5% to a penetration rate of almost 30% between 2004 and 2005, the delay in privatizing Ukrtelekom is expected to inhibit further significant rates of growth.

Despite the monopoly held by Ukrtelekom, alternative operators are emerging to offer competitive services. The main competitors in the fixed-line market are Golden Telecom Ukraine, Optima, and Kyivstar. As is the case in most of the emerging markets in the region, however, the dominant competitive services are expected to come from the wireless sector.

Internet

With an estimated 5.8 million Internet users, the Internet services market continues to be underdeveloped. Furthermore, the penetration rate for broadband is estimated to be just over .1% of the population. The dominance of the fixed-line network by Ukrtelekom is likely to limit the spread of Internet service, and will push more of the market toward wireless data services.

Telecom Trade Agreements

WTO

Ukraine is currently in negotiations to join the WTO, but is not a signatory to the Information Technology Agreement (ITA).

Leading Service Providers

Ukrtelekom
http://www.ukrtelecom.ua

Ukrainian Mobile Communications (UMC)
http://www.umc.ua

Golden Telecom Ukraine
http://www.goldentele.com

Kyivstar
http://www.kyivstar.net/en/

Astelit (Digital Cellular Communications)

Contacts

Regulatory

Ukraine National Commission for Communications Regulations
http://www.nkrz.gov.ua/

U.S. Department of Commerce

Cary Ingram, Industry Analyst, Washington, DC
International Trade Administration
Office of Technology and Electronic Commerce
Tel: 202-482-2872
Fax: 202-482-5834
Cary.Ingram@mail.doc.gov

Ruben Beliaev, Senior Commercial Specialist, Sofia
Telecommunications Equipment and Services
Phone: 380 (44) 490-4058
Ruben.Beliaev@mail.doc.gov

Last updated November 20, 2006
Prepared by: Cary Ingram, USDOC

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