Investing money in the Network
Ukraine’s growing investment attractiveness
Foreign investments have entered the Ukrainian telecommunications market. This time they have come from Cyprus. Soudelor Ltd., part of the FTH Corvette Telecom telecommunications holding company, has purchased 50 percent plus one share of Ukraine’s IPNET Company (Industrial Media Network). This company has the largest wideband Ethernet network in Eastern Europe. It is also the second largest player on Kyiv’s telecommunication market and services 15 percent of Kyiv’s Internet users, according to the company’s data.
An agreement became possible only after the Anti-Monopoly Committee of Ukraine gave its agreement. Now, all legal obstacles have been removed, and “one of the largest agreements concerning foreign investments in the Ukrainian telecommunications sphere” is being concluded, the company’s representatives say. Residents of Kyiv will gain not just large investments (unlimited, as stated in the agreement) but also access to other companies’ technologies that are part of the holding company.
The Industrial Media Network will also be able to involve Western financial institutions’ credits guaranteed by the investor. As a result, the company’s financial future looks quite hopeful (its current statutory capital is only one million hryvnias.) By the end of the year investments will grow to 10 million.
These figures were announced at a press conference by Dmytro Hrushchuk, acting head of IPNET, who said that the investor has left the company’s operations management to Kyivites. In their opinion, this will allow the company to use already acquired experience more effectively and enlarge their share in the Ukrainian telecommunications market.
Businessmen are planning to take over the Kyiv market in three to five years with the help of foreign investments and to enlarge their share from 15 to 50 percent. Entry into the market of other Ukrainian cities with more than a million residents is being planned in two or three years. “The number of Internet subscribers will grow on average by 50,000,” Hryshchuk says. “Today the company services nearly 10,000 subscribers.” Investors have allotted 70 million dollars for this expansion (only in Kyiv).
“Our competitors cannot avoid noticing such changes,” these businessmen say. Today Volia Cable Company is the leader in Ukraine’s telecommunications market and is Kyiv’s largest Internet provider. This company covers 40-50 percent of the whole market, which investors are aiming to enter.
The development of new technologies that the foreign buyers will have to provide IPNET, as the agreement specifies, will most likely lead to the departure from the market of domestic network operators and to the stabilization of prices for Internet services. Oleksii Davydenko, acting head of the Industrial Media Network, said as much at the press conference.
Law-enforcement organs will certainly be interested in Ukrainian local networks, according to the businessmen’s forecast. Hryshchuk said there is already a precedent: “An unlicensed film was found on a computer in Great Britain, and its user was fined a large sum of money.” Hryshchuk did not specify the amount, but added that the content of local networks should be changed. Otherwise, most part of Ukraine will have to be fined.
