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EBRD investment to boost Ukrainian mobile phone market
The European Bank for Reconstruction and Development (EBRD), the largest private-sector lender in central and eastern Europe, has unveiled a US$ 34.2 million (€36.8 million) investment package for Kyivstar GSM, a Ukrainian mobile phone company.
The EBRD’s investment will help to expand the national GSM900 network in Ukraine. By supporting Kyivstar, the second-largest mobile operator in a mobile telephone market with significant growth potential, the Bank hopes to trigger increased competition in the local private sector and accelerate growth within this important area of the economy.
"Mobile phone users in Ukraine want choice. They want value for money, and that will only happen through a more liberalised market and increased competition," said Izzet Güney, EBRD Team Director for Telecommunications, Informatics and Media. "The EBRD has worked with a number of mobile phone operators in various markets. What they all have in common is growth, since people like to talk, as well as other revenue-generating features such as data transfers, which are being used more frequently.
The EBRD’s financing will consist of a US$ 30 million (€32.3 million) loan and a quasi-equity investment of US$ 4.2 million (€4.5 million). The EBRD will support Kyivstar’s twin objectives of expanding the national network and improving customer service. This will help develop an efficient, reliable and user-oriented telecommunications infrastructure in Ukraine. Due to the currently low access to fixed line services, cellular technology is all the more important.
Ericsson Radio Systems AB, part of the Swedish Ericsson Group, is providing Kyivstar with long-term supplier credits of up to US$ 54 million.
There is substantial room for growth in the Ukrainian mobile phone sector. Mobile phone ownership in Ukraine is less than 1 per cent of the population, compared with over 3 per cent in Romania, over 8 per cent in Poland and over 12 per cent in the Czech Republic, and an average of over 30 per cent in western European countries.
Kyivstar has already made good progress in building a sound mobile network. In December 1997, it launched a GSM900 network in Kiev and since then it has expanded the network to cover most of the major cities, including Dnipropetrovsk, Odessa, Lviv, Kharkiv and Zaporizhya. The company has grown to over 120,000 customers, representing about 29 per cent of the total mobile phone market. In March 1998, Telenor Invest AS, a subsidiary of the Norwegian Telenor Group, acquired a 35 per cent stake in Kyivstar.
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