Ukrtelecom considers sale of UMTS license, media reports

Ukrtelecom (UX: UTLM UK) is considering selling its UMTS license to one of the three mobile telecom operators, local daily Segodnya reported yesterday, citing undisclosed sources. At the end of March, Ukrtelecom’s mobile division, which owns the only UMTS license issued in Ukraine, served 674 ths subscribers vs. Ukraine’s total 53.6 mln total mobile subscribers, according to iKS Consulting. Yegor Samusenko: Though this decision is far from certain, should it happen, it would be beneficial for the company. We think Ukrtelecom mistimed entrance to the mobile market – for the last three years, penetration has been in the 100-120% range, stable after seven years of growth. Though Ukrtelecom got its UMTS license more than five years ago, the lack of financing resources and marketing has not allowed Ukrtelecom to reach even the minimum threshold to payback funds used to build the network (it has less than a 2% market share). In the saturated market, we view development of its mobile segment as very challenging and see exit as a lucrative way to attract financing needed for its broadband segment. Another option the company might consider is to development its UMTS license with other operators, which should also attract some cash flow. We expect more news on the company’s strategy after a mid-June EGM when the new owner promised to announce their plans.