Ukraine - Broadband to be the growth driver
Isabelle Paradis
July 2007
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The growth of the telecom market in Ukraine dates back to the first decade after the country's independence. At that time, the telecom market grew at a rapid pace due to the gradual liberalization and subsequent entry of foreign telecom players in the market. Ukraine 's telecom infrastructure development is however lagging behind its European counterparts due to the slow pace of privatisation and inadequate investments in network development.

The Ukrainian telecom revenue reached an estimated US$5.2 billion in 2006 and is forecasted to have grown to US$7.7 billion by the end of 2011. Mobile comprises the largest part, with 52.0%, of the total communications services revenue.

The number of fixed lines in Ukraine has grown by 617,000 in 2006 to reach 12.4 million, representing an increase of 1.5% in penetration, which now stands at 26.6%. Growth is forecasted to stagnate at an average of 2.9% over the next five years to reach 14.3 million subscribers at the end of 2011, which will represent a penetration rate of 31.3%.

The mobile sector has been by far the most dynamic telecom market in the country in the last 5 years, with a staggering average growth rate of 91.4%. At the end of March 2007, the number of mobile customers had grown by an additional 4.4% to 51.1 million, of which 91% were subscribed to pre-paid services. With a penetration rate above 100% however, growth is expected to slow to an average of 4.5% over the next 5 years, brining the number of mobile customers to 60.7 million at the end of 2011. At that time, mobile connections will represent 81.1% of all telephone customers in the country.

The Ukrainian Internet sector is greatly underdeveloped with a penetration rate of 2.3% at the end of 2006. At that time, there were an estimated 1.1 million Internet subscribers and 5.3 million Internet users. Internet growth should continue at a steady base, mainly due to the increasing proliferation of broadband, with an expected average growth rate of 12.3% over the next 5 years, brining the number of Internet subscriber to 1.9 million and the penetration to 4.2%.

Broadband is lagging well behind with a penetration as low as 0.4% in 2006. At that time, broadband represented a mere 15.3% of the total Internet connections in the country. As tariffs become more competitive and networks are upgraded, broadband should rapidly increase in popularity with the general population. The service is therefore expected to growth at an average rate of 41.7% over the next 5 years to reach 932,000 connections by the end of 2010, representing a penetration rate of 2.0% and 48.4% of all Internet connections in the country.

Find out more in HOT TELECOM's Ukraine telecom country profile >>>