MTS Ukraine

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Ukrainian Mobile Communications (UMC) was granted a national license to provide mobile phone services using a NMT 450 network and GSM 900 in 1992. However, the company was forced to bid again for its GSM 900 license in 1996 in order to obtain the necessary frequencies. The government awarded three GSM licenses in 1996. The other two licenses were awarded to Ukrainian Mobile Communications (UMC) and Ukrainian Radio Systems (URS). The tender process was considered controversial since the initial GSM tender call for awarding two licenses, but the Ministry of Communications ended up granting three licenses. In addition, the Ministry awarded a DCS-1800 license to Golden Telecom while the GSM tender was still in process. The Ministry also increased the license fees after awarding the three GSM 900 licenses. For its 10-year license for GSM 900, the company had to make a US$65 million up-front payment plus US$2 million per year. In May 2001, UMC paid US$0.4 million for the licence to operate a GSM system in Kharkov. The main owners of UMC were the state-owned local incumbent Urtelecom (51%), PTT Telecom of Netherlands (16.3%), Telecom Danmark (16.3%), and Deutsche Telecom (16.3%) by 1999. On November 5, 2002, Russian based Mobile Telesystems (MTS) purchased 57.7% of UMC for US$194.2 million. Under the terms of the agreement, Mobile Telesystems bought 16.35% stake held by the Netherlands' KPN for $55 million, the 16.3% stake held by Germany's Deutsche Telekom for US$55 million, and the 25% stake held by Ukrtelecom for US$84.2 million. In 2003, Mobile Telesystems acquired the last 26% of UMC shares from Ukrtelecom for US$87.57 million and acquired the 16.3% of UMC shares held by TDC for US$91.7 million, rasing MTS's total stake in UMC to 100%. The company launched its NMT 450 services in 1993 and its GSM 900 in September 1997. The company had invested US$90 million in the development of its NMT 450 network to cover 45 cities by 1996. In addition, UMC invested US$16 million to launch the first phase of its GSM 900 network. The company had invested US$250 million in its network development by September 1999. UMC competed with Kievstar (GSM 900), Golden Telecom (DCS-1800), Digital Cellular Communications (D-AMPS), and Ukrainian Radio Systems (GSM 900) by 1998. By end 2005, UMC was a top three mobile operator in Ukraine with 13.3 million subscribers and a network that covered over 90% of the territory of Ukraine. subscribers and capex info obtained from wireless intelligence UMC’s capital expenditure almost doubled year-on-year in the third quarter of 2006 to USD203 million, whilst it was implementing cost-cutting measures to improve financial results. Its average subscriber acquisition cost fell to USD9.7 in July-September from USD12.7 in April-June and USD15.7 in 3Q 2005.