The Q411 update to our Ukraine Telecommunications Market Report is based on mobile operator and regulatory data covering the period through to the end of June 2011 and the end of 2010 respectively. We have updated our forecasts for the country's fixed-line, mobile, mobile ARPU and broadband markets through to the end of 2015. We have also included updates on regulatory measures in the country, as well as a complete data analysis of the mobile market.
The release of financial and operational results by VimpelCom for the period ending June 2011 has enabled for a full-year comparison of how the newly merged entity has performed. The merger of VimpelCom and Kyivstar was delayed until October 2010 and, even then, took several months to conclude. Data for both companies have been fully integrated into VimpelCom's results from Q210, reflected in this report. The operator has performed strongly post-merger, growing in terms of market share, ARPU and financial indicators. Some of this is attributable to improved economic conditions in Ukraine, nonetheless some of the gains reflect the successful integration of respective operations into VimpelCom.
Ukrtelecom's privatisation, completed in Q111, has begun to have an effect on the market. The incumbent has made two announcements that are likely to have implications for the markets in the medium term. First, that it plans to invest UAH3.2bn in fixed-line and broadband infrastructure, bringing much needed technological upgrading to Ukraine's largest market. Second, it has announced its desire to divest its mobile operator Utel. As the sole 3G license holder in Ukraine we believe its sale has the potential to boost the market in two ways. The first is through selling to an international operator willing to bring capital and technical expertise into the Ukrainian market. The second is the potential for the sale to catalyse the licensing of 3G services in Ukraine, which has been a barrier to further development of VAS for mobile operators for some time. It is reported that this licensing will take place in H211 or H112, although we remain cautious due to the poor track record of the Ukrainian regulator over the matter.
TurkCell-owned Astelit performance stabilised in Q211 after a dismal succession of subscriber losses in five successive quarters to Q111 While the operators headline subscriber figure remained unchanged from Q111 to Q211, the number of active subscribers increased by 300,000 to 6.4mn. This performance is encouraging for the operator's future prospects However, it has made little effect repairing the damage, which resulted din it losing 3.5mn subscribers fromYE09 to Q111. Over the same period its market share has declined from a high of 22.1% in Q409 to 16.2% in Q111.
Astelit was not alone in its positive performance in Q211, with VimpelCom reporting an increase of 297,000 subscribers and MTS 300,000 subscribers. Although we believe the market could maintain this growth in future, we continue to expect growth to be minimal, verging on flat, and there will be volatility as operators make net additions and discount inactive SIMs over the coming period. We have revised our long-term forecast downwards as we now expect the market to reach 54.739mn subscribers in 2015, equating to a penetration rate of 123%. The Ukrainian broadband market finished with 3.661mn subscriber in 2010, reflecting a growth rate of 60.6% as strong growth rate in H110 was continued in H210, driven by increased xDSL penetration and more competitive pricing. We believe the market will grow to serve 4.48mn subscribers by the end of 2011.
Taking into account the likelihood that mobile broadband will become more popular once licensing proceeds and the increasing investment of Kyivstar in FTTB, as well as the potential investment by Rostelecom through Datagroup and the entry of MTS; we forecast a broadband subscriber base of 6.94mn at the end of 2015 with a penetration rate of 15.7%.
Click for Report details:Ukraine Telecommunications Report Q4 2011