Mobile market review – Ukraine 2008

Ukraine is one of the European eastern countries experiencing highest economic growth in the last decade and holding considerable business potential. With over 46.3 million people in 603,700 km², its GDP per capita is positioned at $6,900, lower than neighbouring states but with great improvements seen in the last 3 years.

These improvements are mainly driving a increase in consumer purchasing power, spurring business opportunities and increasing Ukrainian’s market attractiveness for external investments. Some remarks to point out: (i) legislative frameworks, tax and privatization levels have been improving over the years although government involvement in the telecom sector has presented some obstacles in the recent past (e.g., the award of the only 3G licence to the state-owned fixed-line monopoly Ukrtelecom)  (ii) Over 37% of the population lies below the poverty line and may only be targetable through low-value product and service offerings or not at allow-value product and service offerings or not at all.

In terms of telecom KPIs, revenues in the Ukrainian mobile market are voice service-driven and there is extremely limited room for additional mobile voice penetration, which has reached a 111% according to latest broker reports. Data traffic as percentage of services revenues remains very low with levels of less than 12%, unveiling room for growth, as voice revenues were flat or even decreasing in the last year.Although usage is fairly high in Ukraine (about 140 MOUs per month and subscriber), low per minute voice revenue is keeping Ukrainian ARPU among the lowest in Europe, with less than 5€ of monthly ARPU (average revenues per user). This is mainly due the huge diversity of small operators in the country, with small market share rates and contributing to churn and intensifying price pressures.

As main representatives of the telecom scene, we find Kyivstar, GSM operator with 23.87M clients (Telenor, Alfa Group), UMC GSM and CDMA2000 operator with 19.92M clients (MTS) and Astelit, GSM operators with 9M clients (belonging to Turkcell & SCM Holdings) and finally URS, GSM operator with 1.9M clietns. Second tier operators in the market would involve, Velton Telecom, ITC, Intertelecom and Peoplenet slightly over 100K clients each.

The Ukrainian customer base is almost completely prepaid, which contributes to high levels of overall market churn if we compare them with the average levels of western and central Europe. Prepaid vs. postpaid split is around 94% vs. 6%.

Find next a brief video slide with the data remarked within this post.
CVA