Ukrainian Court Refuses to Grant 3G Licenses

Ukraine's Kyiv Appellate Administrative Court have overturned a previous ruling in favour of Kyivstar getting a 3G license. The telecoms regulator has constantly refused to grant 3G licenses to commercially-owned mobile operators, citing a failure by the operators to reach an agreement with military bodies on joint usage of the frequencies.

The only 3G license holder in Ukraine is state-owned fixed-line monopoly Ukrtelecom, which received the license without an auction in late 2005, ostensibly to boost the value of the firm prior to privatisation. Ukraine's two top cellular operators, Kyivstar and UMC wrote to the President, Viktor Yushchenko protesting at how the license was awarded and demanding an open tender be carried out.

"We appreciate the importance of privatizing Ukrtelekom as soon as possible, but would call for clear and even rules for all market players, no matter what their ownership as the basis for effective economic development," the companies said in the letter.

In late 2006, Kyivstar, as well as four other Ukrainian mobile operators, UMC, Astelit and URS, filed applications to get 3G licenses, but they were rejected by the regulator - even though it was expected that an auction for the licenses could raise upwards of US$1 billion for the government. The regulator has previously said that it needs at least 24 million hryvnas (US$5.3 million) to clear the military radio spectrum for use by the mobile operators - a tiny fraction of the potential income from releasing the spectrum for 3G services.

Kyivstar filed another application in January 2007 to get frequencies for 3G services in all 27 Ukrainian regions. The regulator refused to give the company the license, citing a lack of free frequencies, and it was this which lead to the legal appeal.

According to statistics from the Mobile World subscriber database, the country ended Q1 '08 with an estimated 54.7 million mobile phone subscribers, representing a population penetration level of 118%. Kyivstar is the market leader with 43% of the customer base.

Posted to the site on 18th July 2008