2012 Ukraine - Telecoms, IP Networks, Digital Media and Forecasts

Ukrtelecom ditches FttN for FttH national network

BuddeComm’s half-yearly publication, Ukraine- Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in one of Eastern Europe’s largest markets. The report includes the regulator’s market data updates for 2011, State Statistics data to June 2012, telcos’ operating and financial data to June 2012 and key market developments to mid-2012.

Economic background

Following a turbulent period in the transition from independence from the Soviet Union, Ukraine enjoyed strong economic growth culminating in accession to the WTO in 2008. In common with most of its neighbours, the country has been adversely impacted by the global economic turmoil. One of the hardest hit countries in the region, GDP fell by almost 15% in 2009. However, unlike in most other markets Ukraine’s telecom sector has shown considerable resilience, growing steadily during the last few years, with the broadcasting and mobile sectors offsetting the faltering fixed-line telephony sector. Partly assisted by the IMF, the country has worked to restore economic health and as a result GDP rose 5.2% in 2011, though this is expected to slow to 3% for 2012.

Telecom market overview

Ukraine’s large population supports a substantial telecom market which showed a 6% growth in revenue in 2011 and a 10% growth in the first half of 2012, year-on-year. Both the market and regulatory regime have been influenced by the country’s prospective membership to the EU though recent internal political events, criticised by Europe’s political leaders, may jeopardise the free-trade agreement between Ukraine and the Union, and delay further progress towards accession. The telecoms sector stands to benefit further from the regulatory clarity derived from the EC’s telecom framework, as also from market competition which it promotes and the attraction for investment from Western European and Russian telcos.

Broadband market

The broadband subscriber base has grown steadily in recent years, as has revenue from the sector. Important developments are expected from 2013 following the decision to set up a universal service fund to expand and improve broadband delivery in rural areas, as also by the commercial decision by the main provider Ukrtelecom to invest in a national FttH network.

Key telecom parameters – 2010; 2012

(Source: BuddeComm)

Market Highlights

• Broadcasting revenue may reach UAH2.7 billion for 2012 in line with the expansion of DTTV services nationally. The sector stands to benefit from the launch of services from the Russian satellite provider Tricolor TV, though broadcasting generally remains plagued by large scale illegal viewing.
• Ukrtelecom transferred mobile assets to a new unit, TriMob, which relaunched UMTS services in early 2012. The operator’s sale may be abandoned by the parent company.
• By the beginning of 2012 Kyivstar had expanded its FttH network to more than 100 cities, covering some 3.8 million households.
• Ukrtelecom decided in mid-2012 to suspend its FttN network for an FttH solution, asserting that the latter was cost-effective and a better long-term solution for the country. 

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Ukraine. It provides further information on:

• Market liberalisation and regulatory issues;
• The impact of the global economic crisis;
• Telecoms operators – privatisation, acquisitions, new licences;
• Mobile data market developments in coming years in light of spectrum auctions and new license awards;
• 3G developments, regulatory issues and technologies including HSPA;
• Broadband migration to an FttH architecture;
• Historical and current subscriber statistics and forecasts;
• ARPU statistics and forecasts.

Data in this report is the latest available at the time of preparation and may not be for the current year.