Ukraine - Telecoms, IP Networks, Digital Media and Forecasts

Growing Ukrainian telecom investment concentrates on FttH

BuddeComm’s annual publication, Ukraine - Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media sectors in one of Eastern Europe’s more mature markets. The report includes the regulator’s market data to the end of 2011, telcos’ financial and operating data to September 2012, State Statistical data to November 2012 and market developments to February 2013.

Telecom market overview

Ukraine’s sizeable telecom market is among the more developed in Eastern Europe. Sector revenue has also shown robust growth in recent years, in contrast to the situation in most Western countries where revenue decline has resulted from competition and regulatory measures compounded by poor economies. Ukraine’s comparatively less mature market, particularly in the broadband and data sectors, has thus provided comparatively steady returns and consequently continues to attract investment. Mobile broadband services present a considerable growth opportunity given the saturated mobile voice market though operators are hampered by a poor licensing regime. Opportunities therefore exist for CDMA operators, which initially offered fixed-line services but have since moved into the mobile market, launching mobile broadband services.

Broadband market

FttH/C development has thus far been impeded by cost, resulting in the continuing dominance of the DSL platform though this is also being challenged by cablecos which continue to invest in network upgrades. Operators such as Vega and Beeline have responded by increasing investment in fibre, expanding beyond high-density areas. The incumbent operator Ukrtelecom is developing an extensive GPON FttH network, having suspended plans to deploy FttB as insufficiently future-proof. The move was in the context of a four-fold increase in the company’s fixed broadband network investment in 2012. The fibre sector thus shows great promise for coming years, enabling the nascent IPTV sector and other high-end data services to develop.

Key telecom parameters – 2010; 2013
Sector | 2010 | 2013 (e)
Subscribers by sector (million):
Fixed broadband subscribers | 3.66 | 6.12
Mobile broadband | 2.3 | 4.1
Mobile phone | 53.9 | 63.4
Fixed-line telephony | 12.2 | 11.9%
Penetration by sector:
Fixed broadband | 10% | 13%
Mobile | 112% | 123%
Fixed-line | 26% | 24%
(Source: BuddeComm)

Market Highlights

The regulator is expected to finalise its decision on number portability later in 2013, facilitating the competition in the fixed-line market.

Epic still plans to sell Ukrtelecom’s mobile unit TriMob despite strong growth in the operator’s subscriber base, and some UAH80 million invested in its 3G mobile network in 2012 alone.

The mobile sector saw ITC in late 2012 shut down and transfer subscribers to Intertelecom. The decision followed the revocation of its licence and also affected its subsidiaries Velton Telecom and Ukrainian Wave.

Investment from the cableco Volia has enabled the company to extend its 150Mb/s service, among the fastest in Europe.

IPTV has emerged as a key service for broadband operators to reduce churn and increase revenue from consumers. Though take-up is very low, a number of new licences together with network upgrades should see take-up increase rapidly in coming years.

Ukrtelecom has registered three trade marks for its FttH-based services in anticipation of a commercial launch later in 2013.

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 and LTE;
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.