The one who is first to offer a quality and affordable package of services from a single source secures unique advantages for themselves in the future.
The mobile market has reached the bottom
The level of mobile communication penetration in Ukraine has reached those indicators - 120%, when operators are forced to worry about modernizing the business model itself.
The quality, coverage, and cost of mobile technologies today are absolutely comparable to fixed-line communications. For example, the average revenue per mobile subscriber per month (ARPU) at large operators fluctuates at the level of 40-45 hryvnias. A "fixed-line" subscriber spends about 30-35 hryvnias on voice telephony.
The average call duration (MOU) is also quite close - for mobile operators it fluctuates at the level of 170 minutes, for "fixed-line" ones - not much more.
In addition, operators are mastering adjacent sectors. "Ukrtelecom" is engaged not only in fixed-line communications and data transmission. It provides mobile communication services and is even testing internet television (IPTV) for commercial launch.
Meanwhile, mobile operators have taken up building their own fixed networks and data transmission. Some went further, buying up a number of national and regional fixed-line operators.
No one is trying to grow the subscriber base anymore, as was done before. Moreover, some operators, especially the "big two" - MTS and "Kyivstar," are openly revising their connection statistics downward.
An open culling of "dead" cards is taking place. In this regard, in the past quarter it was even possible to stop and level out the ARPU value. This indicator is extremely important for stock quotations on international stock markets and for attracting foreign and domestic investment.
But the trend for mobile operators still remains unchanged: the subscriber talks longer but pays less. Moreover, in the struggle for the mythical status of "third operator," some market participants resorted to extremely problematic methods of competition that can be compared to dumping.
In particular, in the fourth quarter of 2008, the net loss of the operator life:), 55% of whose shares are owned by Turkish Turkcell, amounted to 251.2 million dollars, which significantly exceeds the losses in the fourth quarter of 2007 - 34.8 million dollars, and in the third quarter of 2008 - 24.2 million dollars.
The operator's net loss for 2008, according to company data, amounted to 326.5 million dollars. Over the last three months of 2008, its subscriber base increased by 500 thousand, but the ARPU indicator sharply declined - there is an obvious severe traffic imbalance.
A separate problem is the situation with operators' bills for mutual connections. Today, small players are almost subsidizing the large ones, who are trying to route all traffic to their networks, and therefore - to earn more. Under such conditions, dreaming of winning the struggle for the status of "third operator" is not warranted.
Crisis - a time of great opportunities
According to the State Statistics Committee, in the first quarter of 2009, the revenue volume of mobile communication participants shrank by as much as 27%. In dollar equivalent, operators significantly reduced their profits, but the main problem for them is the lack of available credit.
Today, the level of investment in network development reaches billions of dollars. In particular, "Kyivstar" says that the company has invested more than 3 billion dollars since entering the market. Unfortunately, it is difficult to verify these data.
MTS declares a total volume of investments in infrastructure over the past three years at the level of 2.7 billion dollars, however, this figure is unlikely to correspond to reality.
According to one of the former top managers of the company "Ukrainian Mobile Communications," who worked there before its sale to the Russians, the initial investment in UMC barely exceeded 30 million dollars. Everything else - reinvested profits over several years. In total, it amounted to several hundred million dollars, which allowed the flagship company to be sold to the Russians for a billion dollars.
MTS also reinvested profits, but not as intensively as UMC, while not forgetting to transfer a certain amount to Russia every year as a return on investment.
And since the fourth quarter of 2008, according to company insiders, MTS barely has enough money for advertising, because all gross profit is systematically transferred to the parent company. It has enormous debts in the West and is experiencing unprecedented problems with current liquidity.
"Astelit," the life:) trademark, has invested about 1 billion dollars in development since the project's launch, which almost coincides with parallel estimates by independent experts. And since the company has always operated at a loss, it can be argued that this is about investment, not profit refinancing.
Russian Beeline, "entering" URS, promised to invest about 500 million dollars in its development. And these are not all the expenses - ahead lies the acquisition of 3G licenses, the cost of which may reach tens or even hundreds of millions.
According to iKS-Consulting, only in July were mobile operators able to improve the dynamics of new subscriber connections, as well as increase the "value" of one subscriber and the duration of calls on the network.
It should be acknowledged that a catastrophic market decline did not occur - the crisis only emphasized the problems that had been accumulating in the industry over a long period. However, the crisis also has advantages - it is the best time for mergers and acquisitions.
Even before the onset of global problems in the world economy, large operators began buying up small companies in regions with growth potential and subscriber bases. Now, what previously cost at least several million dollars can be bought for hundreds of thousands.
Large mobile operators that are mastering the fixed segment and data transmission sector should now behave more aggressively, investing money in building networks and buying up regional assets with ready-made networks and subscriber bases.
But not everyone turned out to be ready for this. Some - due to the significant rise in the cost of credit resources, others - due to subjective difficulties in the work of the executive vertical.
Learn new words
FWA, UMTS, Triple Play, Quadro Play, IPTV, LTE, convergence of standards and services - these are the concepts that will ensure undeniable success for market players in the near future.
The industry is moving toward service bundling and convergence - the blending - of standards. This means that for the subscriber it will not matter how they receive voice telephony, video signal, and transmit data via the internet.
At the current stage of technology development, this refers to broadband internet access - FWA. According to iKS-Consulting, in the first quarter of 2009, the number of FWA subscribers amounted to less than 2 million, or 8.5% of the population. At the same time, the total revenue volume of this market for the first quarter amounted to more than 500 million hryvnias.
The leader in connections remains "Ukrtelecom," which already has 668 thousand subscribers. At the same time, in the case of a more active entry into the FWA market by mobile operators with new technologies, standards, and licenses, the hegemony of "Ukrtelecom" will be broken, and the market may experience a revolutionary breakthrough.
In particular, at the end of 2008, Ukraine had about 4 million mobile internet users and another 400 thousand users of 3G services.
New technologies: who will fire first
Experts identify two problems hindering the radical development of the information and communication technology market: objective and subjective. The former include difficulties with obtaining a 3G license, the slowing of the radio frequency conversion process, and the lack of available investment resources.
As is known, only "Ukrtelecom" has such a license in Ukraine, having received it not through market means but through outright lobbying of its interests by the state. The state is effectively restraining the issuance of such licenses to mobile operators. In this regard, the problem of frequency conversion, which the NKRZ refers to, appears contrived.
There is one hope that on the eve of elections the government will need additional resources to ensure social guarantees, and it will "persuade" the Ministry of Defense and the NKRZ to promptly carry out conversion - not at the price of 2.5 billion hryvnias, as the defense agency wants - and put frequencies and licenses up for sale.
And even so, at this stage the question will arise of the expediency of huge investments in this standard, since LTE and 4G standards are approaching.
At the same time, "Ukrtelecom," due to limited resources, was unable to effectively use the time window granted to it for a leap forward. The subscriber base of cellular communication users of Utel - a branch of "Ukrtelecom," according to iKS-Consulting, in July 2009 amounted to less than 300 thousand.
At the same time, both MTS and "Kyivstar" have recently been actively preparing their networks for the transition to 3G. Analysts claim that their main advantage over "Ukrtelecom" and other mobile operators is the availability of serious investment resources. However, this assertion is false at least regarding MTS.
However, subjective problems arise here.
At the global level, shareholders and top managers understand the prospects and inevitability of such directions of development. However, at a lower management level, the problem of unpreparedness to work in harsh conditions arises. After all, this concerns non-core business - the development of fixed and optical lines.
Instead of an epilogue
Today it can be unequivocally stated that the crisis has reached the "bottom." This means that already in 2010 the economy will recover, and market development will take on a consistent character. Sooner or later, mobile operators will receive a license for 3G or even 4G communication and will build networks for launching bundled services.
And then a new round of competitive struggle will begin, but already more global and less civilized. Only those who during the crisis took loans not to pay salaries and for tender bribes, but invested them in development, will be able to win in this competition.
The end consumer will only benefit from such a struggle. The main thing is that at the moment of exiting the crisis, monopolization of the market does not occur. And this is possible in the case of introducing new forms of its regulation and a specific privatization of "Ukrtelecom," for example by one of the large players.