Boston, MA -- (SBWIRE) -- 08/12/2013 -- The resale of incumbent Ukrtelecom to a local investor has the potential to boost market growth and bring much needed new investment to broadband services. However, BMI believes there are risks to this outlook as a former state-owned entity passes into the hands of a businessman with operations across a number of industries, Including existing telecoms services. If previously announced plans to invest heavily in fixed infrastructure come to pass, and a possible start to some consolidation in the market, BMI believes Ukraine's telecoms market could start to catch up to its regional peers. Ukraine sits at the bottom of the league table for Central And Eastern Europe, having only licensed one operator for 3G services, exacerbating the geographic difficulties of extending fixed broadband coverage.

Key Data

- The uptake of broadband services is low, with penetration estimated to have reached just 15.8% at the end of 2012.
- Particularly significant is the lack of 3G service development, with 3G subscriptions accounting for just 2.3% of the mobile market at the end of 2012, by far the lowest in the region.
- Ukraine's mobile market is expected to expand by 3% in 2013, down from the strong 8% in 2012, due to market saturation and the possibility of inactive subscription deduction.

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Key Developments

Ukrtelecom was acquired by Rinat Akhmetov in early June 2013, only two years after it was finally privatised and generated around US$1.4bn for the Ukrainian government. Akhmetov owns businesses in a number of industries and there is concern over another former state-owned entity entering the hands of the few investors available in Ukraine. Nevertheless, if Akhmetov's SCM commits to investing in infrastructure then the acquisition may prove to be a positive development for the market.

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