The Cabinet of Ministers of Ukraine decided to jack up the price of 3G licenses for mobile operators

Photo: Fotobank.ua

The starting price of licenses for mobile operators on 3G (UMTS) may be increased again. Sources of Capital in the National Commission for State Regulation of Communications and Informatization (NCSRCI), the Cabinet of Ministers and the market informed that the government has once again returned the bill for revision of the conditions of holding tenders. “The requirement to us is changing the prices of lots according to the new exchange rate of UAH 15.1/US $1,” one member of the NCSRCI informed Capital.

Dragging out the process at any cost

According to the resolution of the Cabinet of Ministers of September 5, 2014, the text of which was published only at the end of November, one license for 30 MHz all over Ukraine will cost the winner of the tender UAH 2.443 bn. Now the Cabinet says this figure should be adjusted according to the approved method of calculations. The fact is the rate was pegged to the dollar and not set in hryvnia. As a result, each license could cost an additional UAH 439 mn making the final price UAH 2.882 bn. From this the state is counting on collecting an additional UAH 1.3 bn of guaranteed revenues to the budget.

The NCSRCI has basically one day to smoothen out all of its differences with the government, as it appears that the next meeting of the Cabinet of Ministers in its current composite will be its last one. “If on Tuesday the committee introduces amendments then the next day the document will most likely be signed. It is not in their interests to drag out the process and attract unneeded attention,” a source of Capital in the Cabinet said. “If we fail to regulate this matter on time, the conditions will have to be agreed to with the new government, which means another two months,” the source in the NCSRCI noted. In that case, the tender will not be held in February as the committee plans, but in April 2015. “The current government is trying at any cost to delay the decision on 3G tenders until the new government is formed. At the very least, this is the minimum task that the Cabinet is successful at,” says Director of the Internet Association of Ukraine Tatyana Popova believes.

Far from the first adjustment

As telecommunications expert Olena Minich informed last week, the government should have approved the terms and conditions of 3G tenders last Wednesday. “But they said that it does not have to be submitted to the Cabinet as it will be signed by the premier in his working regime,” she wrote on her Facebook page. A week ago nothing was known about the surprises regarding the exchange rate of the dollar.

Noteworthy, last Tuesday the NCSRCI finally heeded the last request of the Cabinet of Ministers. Hoping that the conditions will be approved, the NBU introduced to them an essential amendment – namely, the rate of conversion (i.e. transition of the means of communication of the military to other bands) was pegged to inflation index. Earlier, its rate was agreed at UAH 1.6 bn by all participants in the process. Taking into account that the process of rearmament takes four years, government officials feared that the specified means would be insufficient. After all, the cost of production of military equipment on the territory of Ukraine may increase over this period.

This time the NCSRCI is in no rush to make new adjustments. One source of Capital said that yesterday Head of the NCSRCI Oleksandr Zhyvotovskiy paid a visit to the Cabinet of Ministers to discuss this matter. The publication did not have additional information when the issue was published. Clearly, if Zhyvotovskiy fails to reach a compromise at the last moment, the Cabinet will have the last say in the matter.

Expensive 3G on the horizon

Market players and experts believe the idea of the Cabinet of Ministers is untimely. Head of the Public Relations Department of MTS Ukraine Viktoria Ruban noted that the business plan for 3G is approved by shareholders and making amendments to it requires more time. “This is not about the introduction of a new tariff, rather the launch of a serious infrastructural project,” she emphasized.

“Should tariffs of operators also be indexed for clients on a daily basis according to the exchange rate of the dollar?” Minich asked rhetorically. By the way, it is common knowledge that the rates in 3G networks will be higher than the current tariffs for mobile communications, President of Kyivstar Petro Chernyshov mentioned it in an interview for Interfax-Ukraine. He said this is directly connected to the high cost of licenses for 3G communications.