Ukraine - a more upbeat assessment for the telecoms sector

Following the recent highly negative report from Companies and Markets, iKS-Consulting, a specialist Central and Eastern European ICT research organisation has provided a much more up-beat assessment of the market in Ukraine. In the telecoms sector, revenue increased over three and a half times, from $2.33 billion in 2003 to $8.35 billion in 2008. While this has now slowed significantly, the internet access and satellite TV sectors will deliver future growth and the situation in the Ukraine is nowhere near as bad as has been suggested.

There are over 1300 telcos currently operating in the country and 40% of revenues are generated from residential consumers. Market segments bringing in the most financial income are mobile – with a 63.1% share – and fixed line, with 20.6%. The internet segment generates 4.5% of industry revenues.

Mobile Communication

In 2008 the number of mobile subscribers was at the level of 55.2 million people using the GSM standard, 800 thousand using the CDMA standard and 150,000 using the UMTS standard. The market of mobile communication in Ukraine has reached its saturation level – by the end of 2008 the penetration of mobile communication was 121% based on total number of SIM-card holders.

Therefore, as the demand for voice services has been satisfied, providers have identified value added services as the key ground on which they can set themselves apart from their competition. The mobile internet segment has witnessed rapid growth of its subscriber base, as well as increased bandwidth per subscriber, and the resulting return rates have seen mobile internet take the lead – in terms of revenue – in the VAS segment. As estimated by iKS-Consulting, in 2008, revenues from providing mobile Internet access services in Ukraine reached $157.3 million .

Fixed –wire Telephony

In 2008 Ukrainian operators have put into use nearly 222,000 automatic telephone Switching stations, among them 10,000 in rural areas. The net growth of fixed telephony subscribers has been at the level of 120,000 subscribers.

Internet Access

Internet is the fastest growing segment of Ukraine’s telecoms sector. With a penetration level of only 14-16%, Internet and IP services represent the most prospective markets in the country, and according to forecasts, the end of 2009 will see over 2.5 million broadband users.

The Ukrainian internet access market underwent a variety of consolidation processes in 2008, resulting in stronger competition between the main providers.

According to iKS-Consulting, in 2008 the revenue from internet access was estimated as $327 million , having increased by 42% comparatively to the previous year. The number of broadband subscribers has grown by 45% and acceded 2.05 million subscribers by the end of 2008. The private consumers with 88% share dominated in the whole subscribers’ base (penetration was 10% of households). The leading technology has been xDSL holding 55% of new internet subscriptions.

Cable TV

The cable TV segment has been the second fast growing telecommunication sector with a 30% growth rate in revenues.

There were 3.5 million cable TV subscribers in Ukraine at the end of 2008 – a figure which has risen to 3.6 million in 2009. There are roughly 600 CATV operators, while the average subscription fee is 25-60 Hrn (roughly $3-$7).

Terrestrial TV

Digital terrestrial TV (DTT) networks are already complete and operating in Kiev and the administrative regions of Kiev, Zhitomyr and Odesa. The main coordinator and regulating body is the National Council on TV and Broadcasting, while the main executive is Concern RRT, the state structure within the State Administration of Telecommunications.

Transmitters and other network equipment for DTT are in high demand, with a lack of receivers for end users presenting a problem; regulators are currently drafting a bill for the tax free import of components for assembling set top boxes. The adopted national standard is DVB-T MPEG-4, while the DTT market potential is around 10 million homes.

Satellite TV

While the present penetration level is only 2.35 million homes (13%), Ukraine is one of the most promising markets for satellite Direct To Home (DTH) PayTV technologies, with annual growth reaching 200%.

In 2009, the state enterprise Ukrkosmos was entrusted by the Ukrainian Government with the construction of a satellite communication system featuring its own communications and broadcasting satellite. This project will provide services to broadcasting and fixed satellite services and ensure the transmission of satellite TV including HDTV, access to information networks, multimedia services and corporate and departmental VSAT-networks. Services will reach an extended reception area, which will include Ukraine, Belarus, the Baltics, Poland, Hungary, the Czech Republic, Slovakia, Romania and Moldova.

Prime Minister Yulia Tymoshenko has announced that Ukraine plans to launch its own communication satellite in September 2011.

IPTV

There are three operators already providing IPTV services in Ukraine:

  • Ukrtelecom (Utel, TM U’TV);
  • Beeline (URS, Golden Telecom, TM Beeline-TV); and
  • Vega.

In addition to these three, Kievstar is planning to launch services soon (possibly based on 4G-LTE technology). IPTV services, including HDTV, are actively developing among smaller broadband operators, among them Ukrainian Multiservice Network (TM TELEHAUS), Cosmonova and KOLO.TV.

IPTV services are rendered by virtually all internet providers; Tenet is one of the five largest providers of high-speed broadband internet access, and serves approximately 35,000 customers.

About iKS-Consulting

iKS-Consulting is an international consulting agency that provides analytical and administrative consulting services in the field of telecommunications, information technologies and media in Russia, Ukraine, Kazakhstan and other countries of the CIS. iKS-Consulting is held as one of the most authoritative companies in the field of a particular branch consulting all over the CIS.

About Techexpo Company

Techexpo Company is the organizer of international exhibitions, forums, conferences and other infocom industry events to promote the launch and development of new technologies in the markets of Ukraine, CIS countries and Eastern Europe. EEBC Telecom & Broadcasting show is one of the major industry events organized by the company; 2009 will mark the event’s seventh anniversary.

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