Modern economic POTENTIAL OF UKRAINE

Communications and informatization field

The communications and IT industry has remained one of the most steady and dynamic economic industries over the last few years. The industry is characterized by high growth of communications service rates, improvement of their quality and introduction of new technologies, services, and communications network development.

Communications in Ukraine include:

• about 12 mn subscribers of fixed communication service;
• more than 29 mn subscribers of mobile communication service (more than 59% of the Ukrainian population);
• approximately one thousand communications operators;
• more than 30 ths. km of optical fiber communication lines;
• more than 17 ths. km of radio-relay links;
• more than 15 ths. post offices;
• more than 100 companies-manufacturers of telecommunication equipment;
• more than 250 ths. employees in the sphere of communications;
• 10 specialized higher education establishments which annually train almost 30 ths. specialists in the sphere of telecommunications; and
• more than 10 R&D and design institutes.

IT sphere covers 8.5 mn Internet users (almost 18% of the population) and approximately 500 Internet service providers.

The volume of outgoing international telephone traffic increased by 14.6% in 2005 when compared with the same period in 2004, including by 14.5% to the CIS states and 15% to other foreign states (see Figure 5.1.).

Figure 3.6.1. Outgoing international telephone traffic (%, 2005 vs 2004)

Services of vehicular (mobile) communication (52%), long-distance and international communication (24.6%), and local phone communication (10.2%) have the largest shares in the pattern of the total communication services (see Figure 5.2.).

Figure 3.6.2. Pattern of the total communication services volume, %

More than 830 ths. automatic telephone exchange numbers were put into operation in 2005, which brought main phone density to 25 per 100 citizens. The share of digital communication equipment in local telephone lines is expanding (52% in urban lines and more than 31.5% in rural lines).

Upgrading of central telephone exchanges in district centers is ongoing. Approximately 50% of rural and suburb junctions are now utilizing this equipment.

Dynamic development of mobile communications network doubled the number of subscribers of this communication type as compared to 2004. Almost 60% of the country’s population use mobile connection.

Thanks to development of fiber-optical communication networks, OJSC Ukrtelecom improved not only international Internet connection, but also offered equal access to the network in every region of Ukraine.

The industry employs more than 250 ths. people. 4.2 ths. jobs were created throughout 2005. Communication institutions of higher education admitted 5.4 ths. people, of which 2.5 ths. entered colleges upon budgetary support. More than 5 ths. people graduated from communication colleges. Special employment center for communication colleges’ graduates was established to explore the market of jobs and work conditions.

Financial performance. Operators of all ownership forms expect to get approximately UAH 27.6 bn from rendered communication services, according to the results of 2005. Revenues from mobile communication, mailing services, transmitting and receiving of television and radio programs, and radio communications grew at the highest rates.

It is expected that the total taxes, duties, and obligatory payments to the State Budget of Ukraine will amount to about UAH 2.8 bn, thus exceeding the 2004 figures by 4%.

Investment and innovation activity. Operators of all ownership forms applied over UAH 6 bn of investments into development of communication industry. Financing of telecommunication sector and mailing services by 62% was secured by internal resources and by 38% from foreign investors. The largest volumes of investments were put into Kievstar GSM (42%), CJSC Ukrainian mobile communications (27%), and OJSC Ukrtelecom (29%) (see Figure 5.3.). The portion of capital investments put into operation by enterprises, which are administered by the State Committee for Communications, made some 2% of gross capital investments.

Figure 3.6.3. Pattern of capital investments’ utilization in communications

The tendency of direct foreign investments being attracted to the sphere of communications preserved informatization growth. As of October 1, 2005, the volume of investments reached USD 146.4 mn (1.5% of the total foreign investments drawn into the economy of Ukraine).

One new transmitter at the network UT-3 (Ukrainian Televison-3) and eighteen new transmitters at regional broadcasting networks were put into operation in the network of state TV programs, 53 transmitters were replaced, 18 were upgraded, five transponders were restored and thirteen new acceptance satellite stations were launched.

Three outdated high capacity transponders were replaced in the network of state radio transmissions and one of them was upgraded.

Radio-relay links with a total length of 102 km were commissioned and 66.1 km were updated. More than 4.5 ths. km of optical fiber communication lines for digital transportation communication network were laid and put into operation, which is by 7% more than the volumes of 2004. OJSC Ukrtelecom continued to build up the capacity of the Internet on the basis of these lines by connecting different hubs of leading world providers.

The number of regular Internet users in Ukraine expanded to 18% of the population. The growth of users was most noticeable in large and small towns (correspondingly 34% and 16%).

To fulfill the Program of President Yuschenko, "10 steps toward people", the State Committee for Communications developed and approved the Decree of the Cabinet of Ministers of Ukraine of December 15, 2005 No.1208 “National table of radiofrequency band distribution in Ukraine”.

The draft Plan on use of radiofrequency resource in Ukraine and draft Decree of the Cabinet of Ministers of Ukraine on its approval were prepared and submitted for consideration to interested government institutions.