KIEV, Ukraine-Ukraine has witnessed a wireless market boom during the past 18 months, with the number of subscribers jumping from 300,000 to 1.35 million and GSM taking a firm lead among other technologies. The country’s wireless penetration during the past six months increased from 1.7 percent to 2.7 percent.
The mobile sector won a worthy place in the communications industry, as incomes of wireless carriers in 2000 exceeded 1.1 billion hrivnas (US$210 million) and the total income of all communications companies in the country in 2000 was 6.4 billion hrivnas (US$1.2 billion).
GSM accounts for 82 percent of the Ukrainian market with the rest being shared by NMT (13 percent) and D-AMPS (5 percent) technologies. The U.S.-developed IS-95 standard has failed to win a place in the market, and wireless experts predict CDMA technology can return to Ukraine only in the wideband-CDMA (W-CDMA) form.
Competition among the country’s five operating carriers has been robust during the past months and is to further increase as Turkey’s Turkcell entered the market this year by paying US$12 million for a GSM license.
Leaders
Kyivstar, a GSM carrier, leapt forward last year with a 456-percent increase in the number of subscribers. Kyivstar said its subscriber figure more than doubled from January to July 2001 and now totals 650,000. Ukrainian subscriber figures total 1.35 million, and Kyivstar accounts for 45.6 percent of that number. It plans to launch GSM 1800 MHz networks in Kiev, Dnepropetrovsk, Lvov and Odessa, as well as General Packet Radio Service (GPRS), this year.
“The carrier has all chances to become the market leader in 2001,” said Kyivstar President Igor Litovchenko.
However, Ukrainian Mobile Communications (UMC), a GSM and NMT carrier, is determined to preserve its leading position. It had 560,000 subscribers in May and plans to raise the figure to 1 million by year-end. UMC already launched a GSM 1800 MHz network in Kiev and paid 2.21 million hrivnas (US$425,000) for a license in the industrial city of Kharkov. GSM 1800 MHz service rollouts in the Lvov region and Trans-Carpathia are also planned. The carrier also is working to be the first to provide GPRS services in Ukraine.
UMC’s plans are likely to be facilitated by the government decision to sell its entire 51-percent interest in the carrier for some US$200 million. Deutsche Telekom, a UMC co-founder, is said to be a potential buyer.
Second echelon
The second echelon of Ukrainian carriers includes Golden Telecom, Digital Cellular Communications (DCC) and Ukrainian Radiosystems (Wellcom).
Golden Telecom operates GSM 1800 MHz networks in Kiev and the Black Sea spa of Odessa and eyes rollout of a network in the industrial city of Dnepropetrovsk this year. However, it will likely not catch up with the leaders, especially after they start their own GSM 1800 MHz networks. Experts estimate the number of Golden Telecom clients to be close to 80,000 by year-end. The carrier had 38,000 subscribers in January.
DCC has been operating a D-AMPS network in Ukraine since 1995 and continues to expand, although at a slow pace. The number of subscribers is expected to grow from the current 40,000 to 60,000 by year-end.
Wellcom operates a GSM 900 MHz network and focused in 2000 on searching for a potential investor. The carrier plans to launch networks in major industrial cities and along important highways in 2001. Experts differ in assessing Wellcom’s potential and predict the number of subscribers to be 50,000 or 80,000 by year-end. It had 27,000 users in March.
Outsiders
Outsiders include three failed CDMA carriers and one GSM carrier. Velton Telecom, based in the city of Kharkov, failed to create a CDMA network and is now said to have switched to landline communications. Ukrainian Telesystems, which initially cooperated with Qualcomm, but later turned to Lucent Technologies, also failed to launch a CDMA network last year. Nothing more has been heard about a CDMA project of the ITS joint venture, which was reportedly created by NEC and Lucent.
The Astelit carrier failed to create a GSM network and may now lose its license, along with the failed CDMA operators, as Ukraine has passed a law revoking licenses if networks have not been created in six months.
Prospects
Ukrainian authorities believe the domestic wireless market will develop according to the world scenario through expansion, acquisitions and mergers.
“Objectively, the development of the world economy shows that companies work to become bigger and stronger either through expansion or mergers,” said Alexander Baranov, first deputy chairman of the State Communications Committee. “It is evident that mergers are in store in Ukraine. Life will show who will merge with whom.”
Third-generation (3G) prospects are gradually shaping up in Ukraine. Chairman of the State Communications Committee Oleg Shevchuk said his organization has already designed the 3G license issuing procedure, which is yet to be approved by the Economics Ministry. He did not elaborate, but said Ukraine would focus on Universal Mobile Telecommunications System (UMTS) technology.
Vendors
Siemens and Ericsson are the main infrastructure vendors in the Ukrainian market and account for 41 percent and 39 percent of sales respectively. Siemens’ latest successes are equipment deliveries for UMC and a contract with Golden Telecom. Ericsson cooperates with Kyivstar and was the first vendor to sign a GPRS contract, valued at US$100 million, in the country.
Nokia accounts for 13 percent of the market and plans to supply handsets adapted to the Ukrainian language in 2001. Nortel and Motorola account for 5 percent and 2 percent of the market respectively.
