Business news from Ukraine


Public joint-stock company Ukrtelecom has designed a project to connect remote settlements to the broadband Internet access service, which could cover 8,000 villages where 6 million residents are living, during two years, Director for Mass Market Segment at Ukrtelecom Denys Zakharenko said at the presentation of the project in Kyiv on Monday. The total cost of the project is UAH 6 billion, including UAH 3.2 billion (53.3%) of government investment.
He said that all villages with schools (6,900) and villages located close to them with over 100 households will be included in the project.
Ukrtelecom said that mass connection would ensure the coverage of 40% of the total number of rural residents in Ukraine with the broadband Internet access service, which would cut the gap between cities and small towns and villages by 75%, as the share of rural areas in Ukraine where the service is not provided would decline from 56% to 16%, from 8.3 million to 2.3 million people.
According to the calculations of the operator, some 58,000 km of networks should be built to cover 8,000 villages.
The operator said that 14,000 villages are not covered by the project. A total of 2.3 million residents live there. This could be a ground for the second wave of connections.
Thanks to the implementation of the project, broadband Internet access saturation in Ukraine would grow by 4.4%, and GDP would grow by 0.6%, which in the prices of 2018 is around UAH 20 billion. Growth of the national budget’s revenue could be UAH 5.4 billion.
Zakharenko said that the buyback period for government investment could be two years thanks to the increase in payment of taxes.
Ukrtelecom Director Yuriy Kurmaz said that the project will be presented to the government and parliament.

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Ukrtelecom in January-March 2018 received UAH 153 million of net profit, which is 24.4% more than for the same period in 2017, company director general Yuriy Kurmaz has said at a press conference in Kyiv. According to him, net income for this period fell by 2.9%, to UAH 1.615 billion.
EBITDA decreased by 1.3%, to UAH 383 million, while the EBITDA margin increased by one percentage point to 23.7%.
Kurmaz added that revenue from telecommunications services in the first quarter of this year decreased by 5% compared to the same period last year, to UAH 1.435 billion.
In January-March the operator provided fixed-line telephony services worth UAH 747.3 million, while by the end of the quarter it serviced 4.5 million active telephone lines.
Revenues from providing broadband Internet services for this period rose by 4.1%, to UAH 455 million. At the same time, the operator serves 1.445 million subscribers in more than 2,200 settlements.
By the end of the first quarter, Ukrtelecom serviced 3.6 million fixed-line subscribers, 1.3 million subscribers to Internet access services, and 93,000 TV subscribers in the B2C segment. Revenues in this segment from telephony decreased by 6.8%, to UAH 562 million, revenues from providing access to the Internet grew by 0.6%, to UAH 322 million.



The Supervisory Board of PJSC Ukrtelecom is satisfied with the implementation of the company’s strategic development program adopted in 2014, the communications provider said. “A group of experts of a leading international consulting company has completed the evaluation of the implementation of Ukrtelecom’s strategic development program. Taking into account the impact of a number of macroeconomic and geopolitical factors, they confirmed that at the end of 2017 last year’s targets were achieved: the revenue target by 104%, EBITDA by 16.7%, that for the number of subscribers by 91%,” the company said in a statement.
According to the company, in February 2018, its supervisory board instructed international experts to conduct an independent assessment of its strategic development, comparing the results achieved with the target indicators of the program. At the same time, the communications provider has not disclosed the name of the auditing company.
According to the report, the operator outstripped the updated targets of 21 out of the 24 strategic initiatives, including topped the revenue target – by 4% (by UAH 6.654 billion in 2017), EBITDA by 67% (by UAH 1.854 billion), EBITDA margin by 11 percentage points (by 28.1 percentage points).
At the same time, in 2017, Ukrtelecom fulfilled its target for the total number of subscribers (telephony and broadband) by 91% (6.622 million).
The evaluation of the implementation of Ukrtelecom development strategy was carried out with regard to the impact of significant external factors, in particular the cessation of its activities in the country’s temporarily occupied territories; restrictions related to post-privatization obligations and litigations; debts to the company by state and local budgets (including for subsidized categories of the population); massive malicious damage to infrastructure (including theft of copper cable); regulatory restrictions in landline communication (tariffs falling behind inflation), as well as the impact of macroeconomic factors (including devaluation of the national currency, increase in the minimum wage) and market dynamics in general, the company said
“Despite the number of negative external factors limiting investment in development, the assessment confirmed that we are moving along the path outlined by the long-term development strategy. Ukrtelecom is developing as a national telecom operator and industry leader,” the company’s director, Yuri Kurmaz, was quoted as saying.
According to the consultants, Ukrtelecom’s share in the total revenues of the Ukrainian b2b communications market (Internet access, landline communications and data transmission services) by the end of 2017 was 35% (an 8% increase from 2013).



PJSC Ukrtelecom whose 92.79% stake belongs to LLC ESU, which is controlled by Rinat Akhmetov’s System Capital Management (SCM), will not pay dividends for 2017. “It was decided that the profit the company generated last year will be used to cover losses accumulated over previous periods,” Ukrtelecom’s press service told Interfax-Ukraine.
In addition, shareholders re-elected the supervisory board together with its head, Leonid Netudykhata, who once headed the State Service for Special Communications and Information Protection, was Deputy Minister of Transport and Communications, and worked as Chairman of Ukrtelecom’s Board of Directors in 1997-2000.
“The shareholders confirmed the top managers’ course towards further modernization of the company and an increase in the share of revenue from new IP services,” the press service said.
As reported, PJSC Ukrtelecom completed 2017 with a net profit of UAH 867 million, which was 44.3% more than in 2016. The operator’s net income over the year increased by 1.7%, to UAH 6.654 billion.
Earnings before interest, tax, depreciation and amortization (EBITDA) grew by 4.9%, to UAH 1.867 million, EBITDA margin rose by 1.8 percentage points, to 28.1%. The company’s capital investment decreased by 0.7%, to UAH 948 million.

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The leading supplier of telecomm and IT solutions ZTE has opened a long-term credit line to public joint-stock company Ukrtelecom to finance projects, foreseeing the provision of $10 million at the first phase, the public joint-stock company has said in a press release. “In the current conditions, we see a great interest of global business in the national infrastructure ICT [Information and Communication Technology] operator. This is a line which will be used for projects with a payback period of no more than five years,” the press service said, citing Uktelecom’s Director Yuriy Kurmaz as saying.
According to the company, the funds raised will be used to expand the coverage of Internet access in settlements, upgrade the access network and other elements of the company’s infrastructure.
The funds will be available from June 2018. During this time, the company’s specialists will prepare a roadmap and project calculations that are planned to be implemented in this cooperation, the press service said.
“We are starting a new stage of long-term cooperation between ZTE and Ukrtelecom. From now on it will not only be in the sphere of supply of equipment for consumers, but also at the level of important infrastructural solutions necessary for the development of the Ukrtelecom network,” said Director of ZTE Ukraine LLC Mingxi Huang said.

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