One 3G licence to be issued by year-end, says minister; Vodafone ‘unlikely’ to bid

22 Jun 2006

The Ukrainian government may raise up to UAH1.2 billion (USD250 million) through the auction of a 3G mobile licence by the end of this year, Communications Minister Viktor Bondar told reporters yesterday. The starting price is likely to be set at UAH500 million, he said. Bondar added said that he would like foreign operators, such as the UK’s Vodafone and Germany’s T-Mobile, to participate in the auction. However, Vodafone yesterday announced that it is unlikely to place a bid. Analysts pointed out that the group is cautious about entering emerging markets where domestic operators have already obtained licences and a potential competitive advantage. State-run fixed line incumbent Ukrtelecom is Ukraine’s sole holder of a 3G concession.

The government had previously announced that a total of four 3G licences will be issued. TeleGeography’s GlobalComms database notes that one of the four concessions was awarded to Ukrtelecom on 1 December 2005 without a tender, much to the annoyance of the country’s two largest cellcos UMC and Kyivstar, which claimed the award was illegal. Ukrtelecom paid UAH152 million (USD30 million) for a combined 2G/3G concession. Its business plan targets a GSM launch by November 2006, followed by the ‘fast’ introduction of 3G technology as part of a planned long-term investment of USD700 million. The telco previously exited the mobile market in November 2002 when it agreed to sell a controlling stake in UMC to Russia’s MTS for USD172 million. Other domestic contenders for UMTS licences include URS, recently relaunched under the Beeline brand of Russian parent Vimpelcom, and Astelit, backed by Turkey’s Turkcell.

Ukraine, Vodafone Group,

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