|
|
 |
|
  
August 30, 2010
Ukrtelekom, the incumbent operator in Ukraine’s emerging telecom market, is on the auction block. It holds a dominant position in the fixed segment. And a significant stake is up for sale.
Call it a rare telecom trifecta.
As revealed in Pyramid Research’s latest Country Intelligence Report on Ukraine, Ukraine is a country with significant growth potential, and the auctioned stake in Ukrtelecom could be a match made in heaven for a number of eligible suitors, each wanting to gain a foothold in a fast-growing market.
Still, the recent news of the Ukranian government’s proposed privatization of its prized telecom asset did not lead to the usual stampede of telco suitors asking for her hand in marriage. The reason: Ukrtelecom’s road to the chapel has been a long and winding one.
The stop-start privatization saga began an over decade ago. In 2000 President Kuchma approved the law allowing the sale of Urktelecom. Like all good weddings, subsequent delays and disagreements ensued. The stake for sale was changed on multiple occasions, and opinion was split as to the role of the government post privatization, with options varying between 25% and a 50%-plus-one-share structure agreed in 2007. This structure, like the prospect of living under the same roof as one’s mother-in-law once married, diminished the appeal of the transaction to outside investors, and consequently the privatization was again postponed. The stake kept rising and reached the appealing 67.79% in 2009, but at the end (due to the air of controversy around the tender in the late government), the plan was not executed.
Given this background, it is no surprise that interest in Ukrtelekom, the blushing bride, has been rather subdued of late. However, as the possibility of privatization comes around once again, there are a number of factors that will pique the interest of potential suitors.
First, it seems finally that the parliament, the cabinet and the president are working together. The recent regulatory changes further highlight the government’s readiness for auction, by finally implementing a couple of long-overdue regulations in the telecom market such as national roaming and mobile number portability. (Parliament is even considering the creation of a universal fund for the first time.) In addition, the government increased the stake available to auctioneers to 92.79% and, in doing so, added the finishing touches to the bride before her big day.
Although no formal bids have yet been made, European powerhouses such as Telenor, Deutsche Telekom, TDC and KPN have all been active participants in the Ukrainian market at different stages of its development and in varying capacities. Some operators such as Turkcell and Telenor already have a very strong presence through their interest in leading Ukrainian MNOs. Other possible suitors include Vodafone, who signed a partnership agreement with MTS in 2008, with a view to gaining strategic insight into the CIS markets. Closer to home, neighboring JSFC Sistema, the holding company for MTS, and Rostelecom may also show an interest in this tender, as well as Ukrainian holdings such as PRIVAT and System Capital Management.
With wedding bells in the air, may the best operator win.
— Olena Kaplan, Analyst
Related resources:
Ukraine: 3G Licensing and Ukrtelecom Privatization
Country Intelligence Report published August 2010
The Ukrainian telecom market generated UAH36.4bn in service revenue in 2009, a 4.5% decline in local currency compared with 2008 levels. We expect that in local currency terms, Ukraine’s telecom market will exhibit a 4.9% CAGR growth in the forecast period, boosted by fixed and mobile broadband developments.
Ukraine Fixed Forecast
This forecast covers the Ukrainian fixed market and is updated quarterly.
Ukraine Media Forecast
This forecast is updated quarterly.
|
|
Pyramid Points
