Ukrainian mobile operators apply for frequencies to implement the latest technologies
13 November 16:15
Preparations have been completed for one of the most important events for the further development of the mobile market – a transparent auction for licenses to use the radio frequency spectrum in the 2100/2300/2600 MHz bands. This was announced by Danylo Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, Komersant ukrainskyi reports.
According to him, the auction is scheduled for November 19, 2024. Kyivstar, Vodafone Ukraine, and lifecell have been recognized as participants in the auction and bidding. And they have already paid guarantee fees to the state budget for each of the 5 lots, with the total amount of guarantee fees amounting to UAH 664 million. The starting price of the spectrum is UAH 2.9 billion.
As Danylo Hetmantsev explained, this is a valuable limited resource that is extremely important for the introduction of the latest technologies and high-quality communications.
What happened to this important frequency resource before
Until 2014, as Danylo Hetmantsev explained, the resource was allocated rather chaotically and not always in accordance with transparent and clear procedures. As a result, the state had a speculative shortage of frequencies for the introduction of new technologies. As of mid-2019, some users were paying the maximum rent rate set by the Tax Code for 1 MHz of radio frequency band in the amount of UAH 23085.25 per month, while a number of other users, for a resource suitable for the implementation of third- to fifth-generation technologies (3G, 4G, 5G), paid a rent of only UAH 45.83 per 1 MHz of radio frequency band. This difference in rent rates was then explained by the fact that those frequencies were used “for other technologies,” which, it should be noted, were quite archaic for the industry as a whole and were used by a minimal number of subscribers or not at all.
the “business case,” according to Danylo Hetmantsev, was actually different: all these companies, as holders of a valuable asset, were focused on selling it to real businesses. The 40-50 times difference in the tax burden contributed to the fact that, while imitating the rapid activity and “technological revolution”, paying tens of thousands of hryvnias in taxes per year for the “held” spectrum, these traders actually offered to buy it for hundreds of millions to the real sector of the economy.
How the frequency resource returned to the state
at the initiative of the relevant Verkhovna Rada Committee, it was decided to raise the rent rates for such frequencies to the lower limit of the rent for frequencies paid by mobile operators at that time – UAH 3000 per MHz. The logic was simple: either invest in the development of new technologies or return the frequencies to the state.
Back then, as Danylo Hetmantsev recalls, there was also a lot of noise about killing “small businesses” and “putting an end to the country’s digital future.” But the miracle did not happen, as there was no intention to develop something, not just resell it, and this spectrum was later returned to the state. As a result, businesses that operate and invest will receive the necessary resources for development, subscribers will improve the quality of services and coverage, and the state will receive money to the budget based on the results of a transparent and fair auction.
The terms and conditions of the auction for licenses to use the radio frequency spectrum in the radio frequency bands 1935-1950/2125-2140 MHz, 2355-2395 MHz and 2575-2610 MHz for cellular radio communications, as well as the announcement of the winners, can be found on the website of the National Commission for the State Regulation of Electronic Communications, Radio Frequency Spectrum and Postal Services.
