Telecommunications and internet
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Telecommunications: Telecommunications and information technology are important infrastructure sectors for Ukraine . The revival of Ukrainian economy after 2000, as well as foreign and domestic investments in telecommunications made over the last 10 years, have 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. The industry's share in the Ukrainian GDP has reached 4.5%. In 2002 telecom industry revenues grew 20% and reached $1.79 billion. Average level of teledensity reached 22.3% (Source:Kyyv Weekly, April 18, 2003). Long distance and international calls account for 43% of total industry revenues. Two leading wire-line operators Utel and Ukrtelecom process 95% of long distance and international calls. Local loop generates only 25% of industry revenues. Private wireline telecom providers are slowly overcoming existing Ukrtelecom's monopoly, although their market share is still too small to trigger major changes that would reshape the market.
Mobile Communications: Five Ukrainian operators - UMC, Kyivstar GSM, Golden Telecom GSM, DCC, and Wellcom - offer wireless mobile services in Ukraine in the following standards: GSM900/1800 (UMC, Kyivstar GSM, Wellcom, DCC), DCS 1800 (Golden Telecom GSM), and D-AMPS (DCC). Late 2002 and early 2003 brought significant changes in the list of shareholders of the Ukrainian mobile telecommunications. Four out of five Ukrainian mobile operators changed their shareholders.
Wireless mobile communications (MC) is the most active subsector of the telecom industry in Ukraine . MC revenues grew 32.4% in 2002 amounting to UAH 2.67 billion ($500 million). These revenues represent 28% of the total telecom industry revenues. This successful financial performance ranks MC as the second communications subsector in terms of revenue after the long-distance and international wireline communications, that historically led other industry subsectors. The number of MC customers grew 64.2% from 2.214 million to 3.635 million (compare to 8-10 million customers of wireline telecom services)(Source: www.dn.kiev.ua). Although the growth of customer base in 2002 was substantial, it was far below 140% annual growth rates demonstrated in 2000-2001. The market penetration for MC is slightly above 7%.
MC users, who account for only 30% of the national customer base for telecom services, represent the most affluent part of the population and represent a growing market base not only for MC providers, but also for a number of peripheral businesses servicing the MC industry. It took only three years for this new service industry to develop in Ukraine . This rapid growth represents new business opportunities for U.S. companies specializing in products and services for MC users.
Internet and Data Transfer: Internet services are one of the leading albeit small subsectors of the Ukrainian telecom industry. As internet service provider's (ISP) business is not subject to licensing, the only credible source of information on this market sector is the size of data traffic processed by Ukrainian telecom networks, especially since internet services account for most of data transfer in Ukraine .
Analysis of industry performance data in 2002, 2001 and a comparison with industry revenues in 2000 reveals that although the growth in the data transfer and internet has slowed in 2001, year 2002 showed increased growth. This is most likely due to the fact that customer base for internet services, which was earlier limited to a small number of business professionals and a big but low revenue audience of ad hoc users, has expanded at the expense of the growing number and activity of large and medium size corporate customers, and the general upgrade of the national IT infrastructure. Further increase of the internet customer base is limited by several factors, and the poor condition of the Ukrainian local loop plays a predominant role.