NCRC initiates creation of Universal Telecom Service Fund: positive for UTEL

According to a press release from the National Communication Regulation Commission (NCRC), it is pushing for the adoption of a law that would create a Universal Service Fund to finance the provision of universal telecom services to all the Ukrainian citizens. The NCRC proposes charging 3% of telecom operators’ revenue to fill the fund (estimated annual inflow to the fund is UAH 900-950 mln). According to the NCRC, the fund will be used to construct telecom networks in still uncovered locations (more than 2,000 towns and villages), install telephones for socially-subsidized groups of citizens (about 1.2 mln), and compensate telecom operators’ losses from the provision of universal telecom services. Alexander Paraschiy: Creation of the fund essentially translates into the sponsorship of fixed line operators at the expense of mobile telecom operators (3/4 of the fund will be filled from the revenues of mobile operators); the fund would allow Ukrtelecom (UTEL) to increase its annual EBITDA by UAH 400-500 mln (or 6%-7% of the company’s sales) via compensation for loss-making local telecom tariffs. This would raise Ukrtelecom’s value on the eve of possible privatization. If adopted in March, the law would take effect in September.