The state has distributed the largest license package for 4G communication. Ukraine’s president Petro Poroshenko personally visited the auction and told us when villages will be covered by internet access.
On March 6, the second auction for the distribution of 4G (LTE) communication licenses was held. The National Commission for the State Regulation of Communication and Information (NCCIR) decided to auction off the largest package of frequency bands of 1710-1785 MHz and 1805-1880 MHz.
The auction was held at the Ukrainian State Centre of Radio Frequencies (UCRF) outside Kyiv city borders in the forest along the route towards Zhytomyr city. Journalists were warned in advance that “top public officials” were going to be present there. Therefore, it was necessary to come in advance for security reasons and thorough identity check. Deminers with prodders and metal detectors were patrolling the yard shaded by Christmas trees. Walk-through metal detector was installed near building entrance.
The auction itself began quietly. First, operators did not even have to fight.
The first three lots were radio frequency bands, where 2G services are now being rendered. Each of the operators applied for “their” bands and bought it with no competition. Thus, lifecell has paid UAH 795 million ($ 30.11 million) for the first lot of 30 MHz. Kyivstar has got the second lot of 30 MHz for UAH 1.325 billion ($ 50.19 million). Vodafone has taken the third lot of 40 MHz for ($ 38.07 million).
Kyivstar and Vodafone were the bidders for the next three lots of 10 MHz each that were formed as the result of the reframing (redistribution of bands). lifecell dropped out of the race voluntarily. “It would be unjustifiably large expenditures. We would better invest this money to develop 4G-networks,” – Ismet Yazici, CEO of lifecell, said.
KYIVSTAR AND VODAFONE WERE AT WAR FOR ADDITIONAL BANDS TILL THE LAST BREATH
Indeed, mobile communication operators “paid a fortune” for additional bands. Auction struggle was very persistent, representatives of Kyivstar and Vodafone were leaving for the break to deliberate over and over again. By the end of the auction the price of the fourth lot has increased from UAH 271 million ($ 10.32 million) to UAH 612 million ($ 23.33 million). This was the amount paid by Kyivstar for this lot.
Focus on UAH 5 billion
When it came to the middle of the auction and the fifth lot was announced all the public officials and CEOs got on their feet all of a sudden. The president of Ukraine Petro Poroshenko entered the hall. “I will not interrupt you,” – he said, and sat down on the side.
After some time, the representative of NCCIR invited him to give a talk.
“This present time the starting price of licenses has risen more than three times, which is the indicative of incredibly high level of transparency and competitiveness of the process. I have the impression that we will reach UAH 5 billion ($190.7 million) threshold. This money will be transferred to the budget and this is the actual cost of Ukrainian bands,” – Mr. Poroshenko said.
Previously, the expectations of the state were more modest. Dmitry Shimkiv, Deputy Head of the Administration of the President of Ukraine, after the first 4G-auction held in January has talked about UAH 4 billion ($143.8 million).
The fifth lot was won by Vodafone for UAH 742 million ($ 28.3 million), while the starting price was UAH 271 million ($ 10.33 million). The sixth lot was purchased by Kyivstar for UAH 900 million ($ 34.32 million), which is about 3.3 times the starting price.
THE SECOND 4G-AUCTION DELIVERED OVER UAH 5 BILLION TO THE STATE
Vodafone has driven a hard bargain. “We were ready to buy yet another lot. But logic shall apply and sound cost-accounting to determine how much shall be spent now and what shall be invested in network development,” – said Olga Ustinova, CEO of Vodafone, in her interview to Innovation House. Peter Chernyshov, CEO of Kyivstar, said that the cost of current 4G-licenses was rather reasonable and added that his company could spend even more. “Fortunately, it was not necessary,” – he said.
A total of UAH 5.4 billion ($ 204.32 million) were collected by the state and now mobile communication operators shall transfer this money to the budget.
According to Petro Poroshenko, communication of the fourth generation will open whole new realm of opportunity for young people. First of all, educational ones. “We may quickly forget about the paper textbooks and switch to interactive teaching methods. Textbooks are lagging behind in respect of keeping pace with prompt updating, since the knowledge is being updated very vast,” – the president explained.
According to him, 900 MHz bands shall be next to be put out to auction. They may be used to deploy high-speed mobile internet in rural areas. “I believe that upon the end of this auction we will request the regulatory authority to conduct yet another auction for 900 MHz, where 3G and 4G may be deployed for villages and settlements. We will give the rural medicine and rural education the opportunity to become developed,” – Ukraine’s president said.
Alexander Zhyvotovsky, Chairman of the NCCIR, hopes that by the end of 2018 everything will be ready for the next auction. But as yet nothing had been done in this direction.
Telecom operators will launch 4G in the absolute majority of oblast centers until the end of 2018. It is estimated by the president that operators will invest no less than UAH 20 billion ($ 763 million) to develop 4G in Ukraine.