Telecommunications--An Overview

The following is from the US Department on telecommunications in Ukraine

Telecommunications and IT are important infrastructure sectors for Ukraine. The revival of the Ukrainian economy after 2000, as well as foreign and domestic investments in telecommunications made over the last 10 years, has brought marked changes in the Ukrainian telecom industry, particularly in mobile wireless and Internet. Obsolete analog networks are circumvented by a growing number of wireless mobile and fixed "overlay" networks. During January – October 2004, telecom industry revenues reached UAH 17.41 billion or $3.28 billion (compared to $2.54 for all of 2003). The average level of teledensity reached 24 percent. Revenues from long distance and international calls account for 28 percent of total services provided by the industry. Two leading wire-line operators Utel and Ukrtelecom process 95 percent of long distance and international calls. The local loop accounts for 13 percent of industry services. Private wire line telecom providers are slowly overcoming Ukrtelecom’s monopoly, although their market share is still too small to trigger major changes that would reshape the market.

A lack of transparency and slow decision making in licensing and frequency allocation, continuing delays with privatization of Ukrtelecom, ongoing disputes between telecom authorities and private telecom operators seriously hurt the
development of the whole telecom industry which is far behind the rest of the national economy in its movement toward liberalization, transparency and openness for foreign investments. INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2004. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

The last paragraph is splash of cold water that can sober up investors wanting to deal here. But this was written last year and there continues to be headway made against these problems. It is interesting to note that Russian investors see Ukraine as a real land of opportunity in telecom (and all other areas for that matter.) They deal in a country that has had and continues to have in a number of ways the same sorts of problems as Ukraine. So they may have the stomach for more risk and are able more to operate in this kind of environment. But they are still investors and still businesses looking to maximize profit and to minimize risk. What is it they know that you don't know? Details at 11.

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