Ukrtelecom to boost fixed line rates 18% as of October

Ukraine’s telecom sector state regulator hiked the fixed monthly rates for landline phones by 17.5% as of Oct. 1, the UNIAN news agency reported on Sept. 29. The monthly fixed payment, which includes nearly unlimited number of local calls, will amount to UAH 39.1 (net of VAT) in urban areas and UAH 30.9 in rural areas. The increase was initiated by the leading fixed line operator Ukrtelecom (UTLM UK), UNIAN reported, citing the regulator.

Alexander Paraschiy: The adopted regulation will allow Ukrtelecom to adjust its fixed line monthly rates in most packages by 17.5%, from UAH 29.9-33.3 to UAH 35.1-39.1 (net of VAT). We expect the increase will result in about a 15% qoq increase in Ukrtelecom revenue from local fixed line services in 4Q15 (this segment accounts for more than 40% of its total revenue) and improve its profitability.

In the course of the next year however, the rates’ hike will only intensify the decline in Ukrtelecom’s customer base in fixed line voice segment. In particular, the higher rates will bring the minimal monthly costs of fixed line service much closer to the total costs of using mobile phones. To compare, the total APRU (average revenue per user per month) of the two leading Ukrainian mobile providers were UAH 38.7 and UAH 39.2 in 2Q15 – an increase of just 2%-8% yoy.