BMI's Executive Summary

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One of the most significant developments in Ukraine's telecoms market in recent months has been the launch of 3G services by the country's fixed-line incumbent Ukrtelecom, in November 2007. The launch marked the incumbent's return to the mobile market after the sale of its GSM operator Ukrainian Mobile Communications (UMC) to Russia's MTS in 2002. At the time of launch, Ukrtelecom's UMTS services were initially available in six Ukrainian cities. Ukrtelecom has already invested around US$150mn in 3G network development, and it plans to invest a further US$146mn in its W-CDMA services by the end of 2008. With the launch of 3G services out of the way, expectations are turning to the long-promised privatisation of Ukrtelecom, which is now anticipated to take place some time in 2008. Ukraine's State Property Fund had hoped to sell a 37.86% stake in the incumbent operator in 2007, but the sale was delayed partly as a result of parliamentary elections.

Meanwhile, in a move which appears to have secured its place as Ukraine's first 3G operator, MTS Ukraine announced the launch of 3G mobile services in October 2007, based on the CDMA2000 1x EVDO Rev A standard (using the 450MHz spectrum band). The introduction of 3G services by Ukrtelecom, MTS, together with the anticipated launch of CDMA2000-based 3G services by number three mobile operator, Astelit, is expected to kick start Ukraine's fledgling market for 3G services. Although we continue to forecast a slow start for 3G subscriber growth, we now predict slightly faster growth than before in the early part of our forecast. We estimate that there were as many as 20,000 users by the end of 2007, and predict that this figure will rise significantly in 2008. Meanwhile, with mobile penetration having already 120% , we continue to hold to our belief that Ukraine's mobile market has reached saturation point. Although we suspect that the sector continues to contain a significant number of inactive prepaid users, the recent decision by both MTS and VimpelCom to discount inactive users from their respective subscriber base, has given us a slightly more realistic picture of the true size of the market. We estimate that the sector grew by 14.3% in 2007, and that there were around 55.540mn subscribers in the market at the end of the year (equivalent to 119.7% penetration). We predict a more moderate growth rate of 3.2% for 2008 and expect continued but slowing growth over the next five years to result in a sector of some 64.3mn subscribers by the end of 2012.

Just as Ukraine's mobile market starts to hit saturation point, 2008 may be the year that the country's broadband market begins to take off. Ukrtelecom's introduction of IPTV and IP telephony in November 2007, is expected to have a positive impact on broadband growth, as is an increased amount of investment by alternative operators in technologies such as WiMAX and broadband cable. Ukraine sits near the bottom of our Business Environment Rankings for Central and Eastern Europe, with only Bosnia receiving a lower score. The country suffers from relatively low scores in a number of areas, not least country structure and country risk.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Business Environment

Ukraine

Table: Emerging Europe Business Environment Ranking

Ukraine Telecoms Industry SWOT

Chapter 3 - Industry Forecast Scenario

Fixed-Line

Table: Ukraine Telecoms Sector Fixed-line Historical Data & Forecasts

Internet

Table: Ukraine Telecoms Sector Internet Historical Data & Forecasts

Mobile

Table: Ukraine Telecoms Sector Mobile Historical Data & Forecasts

Multimedia

Table: Ukraine Telecoms Sector Historical Data & Forecasts

Key Risks to BMI Forecast Scenario

Chapter 4 - Macroeconomic Climate

Table: Ukraine: Macroeconomic Data And Forecasts

Chapter 5 - Country Snapshot: Ukraine Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 6 - Competitive Landscape

Market Structure

Table: Key Players: Ukraine Telecoms Market

Table: Selected Operators Financial Indicators

Fixed-Line

Table: Regional Fixed-Line Penetration Overview

Internet

Table: Regional Broadband Penetration Overview

Mobile

Table: Regional Mobile Penetration Overview

Market Data Analysis

Fixed-line

Mobile

Table: Ukrainian Mobile Market Q306

Table: Ukrainian Mobile Net Additions Q306

3G Licensing

Industry Developments

Chapter 7 - Company Monitor

Regional Case Study: Alcatel

Table: Alcatel Recent European Contract Wins

Selected Profiles - Operators

Ukrtelecom

Ukrainian Mobile Communications (UMC)

Kyivstar GSM

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Sources

Competitive Landscape for Europe Telecommunications Reports: Sample of Companies Ranked

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Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of European Telecommunications Sources

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BMI's European Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include:.