Regulator initiates Universal Service Fund

Ukraine’s Communications Regulatory Commission (NCRC) is preparing a draft of law on a Universal (Telecom) Service Fund, the regulator said yesterday, promising to make the draft public soon. The NCRC stated that the fund should be filled from charges from telecom operators. At the same time, the NCRC proposes to decrease a special charge for mobile telecom services into the Pension Fund from 7.5% to 4.0%. The NCRC suggests it will be the distributor of the fund; providers of universal telecom services will be eligible for compensation from the fund based on the results of tenders.

Alexander Paraschiy: The news seems encouraging for Ukrtelecom (UTLM UK), which suffers annually from UAH 1+ bln losses from the provision of universal telecom services below their costs. Mobile operators, the main expected contributors to the fund and the main opponents of the fund’s idea, may now agree with the bill, providing their current 7.5% indirect tax will not increase. The key issue is whether the Pension Fund, the beneficiary of mobiles’ additional charges (thus the only loser of the proposed legal changes) will oppose the bill. Taking into account that mobile service charges accounted for less than 1% of total contributions to the Pension Fund in 2010 and 2011, we see the chance for approval of the bill as high.