Fixed Telecom Tariff To Grow In 2008

According to a representative of the National Communications Regulation Commission cited by Kommersant newspaper, the commission is going to increase fixed local telecom tariffs by about 20% in 2008. Alexander Paraschiy: New fixed local tariffs can bring additional annual profit to Ukrtelecom (UTEL: HOLD) of up to USD 80 mln. Though, the increase in fixed tariffs can reduce demand for fixed telecommunication. A raise in the fixed telecom flat monthly rate from USD 3.9 to USD 4.7 will make fixed communications almost as expensive as mobile communications (ARPU of prepaid mobile customers is around USD 5). We forecast net gain of Ukrtelecom from new tariffs will be only USD 50-60 mln.