Ukrtelecom

Aktivs

The company owns the 3G network and the largest fixed-line network in Ukraine.

History

2022

Four heads of the Special Communications and Information Protection Service of Ukraine were liquidated with a missile attack on the company building

According to media reports, as a result of a missile strike by the Russian Armed Forces on the Ukrtelecom building in Dnepropetrovsk on October 10, 2022, four high-ranking employees of the State Service for Special Communications and Information Protection of Ukraine were liquidated.

Control over the Spetsvyazh of the Ukrainian armed forces back in 2021 passed to cybersecurity experts of the US Department of Defense. Official Kyiv considered then that the transfer of special communications under the control of the Pentagon would allow rebuilding the cybersecurity system to protect critical infrastructure in Ukraine.

Large-scale cyber attack, operator works only by 13%

At the end of March 2022, massive cyber attacks hit Ukrtelecom. As shown by the NetBlocks service, which displays the availability of the Internet around the world, users throughout Ukraine faced the problem. According to NetBlocks, the number of connections to the operator's networks fell to 13% of the level that was before the start of the Russian special operation in Ukraine on March 24, 2022.

The State Service for Special Communications and Information Protection of Ukraine confirmed the cyber attack on Ukrtelecom and said that by the end of March 2022 the company continues to restore its services.

To protect the network infrastructure and further provide services to the Armed Forces of Ukraine and other military formations and clients, Ukrtelecom temporarily limited the provision of services to most private users and business clients, the State Intelligence Service said in a statement.

Ukrtelecom was subjected to a large-scale cyber attack

By the end of March 2022, Ukrtelecom remains the largest operator of fixed Internet access in Ukraine in terms of geographical coverage of its activities, but Kyivstar is in the lead in terms of the number of subscribers, and Ukrtelecom is in second position in this indicator.

Speaking to the BBC, Netblocks director Alp Toker explained that, judging by the disconnection of users from the NetBlocks network during the day, we can conclude that the problem is not related to cables or interconnections, but rather to the central infrastructure in the operator's data center. This may indicate a cyber attack, the expert noted.

Ukrtelecom engineers lay cable during conflict

The head of State the special communications and information protection service of Ukraine, Yury Shchegol, said that the department's specialists promptly responded to the cyber attack and repelled it. Ukrtelecom said the same and added that the company was forced to turn off some of the services. According State to the service of the special communications and, by information protection Ukraine the middle of the day on March 28, the attack was neutralized.

Our main task for March 2022 is to defeat the enemy on all fronts, including cyberspace. Each of us can help in this struggle by adhering to the following rules of cyber hygiene: do not open unknown messages, do not upload files of unverified origin and be critical of all incoming information, the special communications service said.

2020: Disconnection of payphones in Ukraine

In early February 2020, it became known about the termination of the work of payphones in Ukraine. Local telecom operator Ukrtelecom has stopped supporting such equipment throughout the country and is starting to dismantle it.

According to the company, the development of various communication channels has led to a decrease in demand for the once demanded payphone services. Statistics suggest that if in 2017 Ukrainians used about 900 thousand minutes every month from payphones, then in 2019 this figure fell almost three times.

In early February 2020, all payphones were turned off in Ukraine

Ukrtelecom stressed that in addition to the falling demand, there is another significant problem - this is the outdated equipment of the payphone network, which is not produced in Ukraine. This causes difficulties with operation. For several years, payphone has been a loss-making service, the operator said.

Despite the availability of modern services (mobile communications, communicators, instant messengers , etc.), payphone services have lost their social significance, Ukrtelecom said in a statement.

As of the beginning of February 2020, Ukrtelecom serves about 4.8 thousand payphones. All of them are placed in cities. On average, about 2.5 minutes of conversations take place from one payphone. The company hopes that those few users of this service will switch to more modern ways of communication.

After refusing to develop and support the payphone network, Ukrtelecom will concentrate on other telecommunication channels, including the provision of Internet access services via optical lines.

By the beginning of February 2020, the operator continues to implement a project for the development of optics and connects villages to it so that thousands of their residents can use fast Internet and television, according to a press release.^[1]

2018

The national television operator Ukrtelecom will receive investments from the Chinese company ZTE. Interest on the part of China in the Ukrainian business in the field of telecom is due to positive economic indicators.

2017

Actual income UAH 6.7 billion

At the end of 2017, the actual income amounted to UAH 6.7 billion (against UAH 6.4 billion planned), the actual EBITDA - UAH 1.9 billion (against UAH 1.1 billion planned), in terms of EBITDA profitability - 28% (exceeding the plan by 11 pp). In 2017, the company received a net profit of UAH 867 million (44% more than in 2016) and paid about UAH 1.7 billion in taxes to budgets of various levels. Despite the fact that the debt states on preferential categories of the population over the past three years has grown to UAH 190 million.

London court ordered SCM Akhmetov to pay $760 million for the purchase of Ukrtelecom

London arbitration in December 2017 ordered SCM to pay the plaintiff $760 million. As part of the proceedings, Raga Establishment obtained arrests on SCM assets in Cyprus and Holland.

Offshore Raga Establishment (the current name of EPIC Telecom Invest) accused SCM oligarch Rinat Akhmetov of defaulting on the purchase of Ukrtelecom in 2013. It turned out that SCM had to pay $860 million for this asset in three tranches, but paid only the first of them - for $100 million. In this regard, Raga Establishment demanded to pay $760 million.

Authorities take Ukrtelecom away from Rinat Akhmetov

In April 2017, the Pechora Court of Kyiv seized 93% of Ukrtelecom, Ukraine's largest fixed-line operator. The arrested package belongs to the System Capital Management (SCM) group of Rinat Akhmetov. The shares of Ukrtelecom's subsidiary, the 3G operator Trimob, were also arrested.

The arrest was carried out at the suit of the Prosecutor General's Office, said the head of the department Yuriy Lutsenko. The Prosecutor General's Office is investigating the circumstances of the privatization of Ukrtelecom in 2011, as well as the allocation of budget funds by order of the former President of Ukraine Viktor Yanukovych for the amount of 220 million hryvnia ($27 million at the then exchange rate) in order to build a special communications network^[2].

According to the Ukrainian authorities, the owner of Ukrtelecom did not fulfill the terms of privatization undertaken to invest $450 million in the operator and transfer the special communications network to the state.

Because of this, in 2017, the State Property Fund of Ukraine through the court demands the return of Ukrtelecom to state property.

2011-2013

Privatization of the company for $1.33 billion in favor of the head of the SBU Khoroshkovsky and resale Akhmetov

In 2011, Ukrtelecom was privatized in the interests of Valery Khoroshkovsky, who was then the head of the Security Service of Ukraine, and financial assistance was provided to him by Gazprom's ex-partner in Ukraine, Dmitry Firtash.

Ukrtelecom was privatized in early 2011: the little-known Austrian consulting company EPIC Goldscheider und Wurmbock Untemehmensberatungsgesellschaft (hereinafter - EPIC) paid the state 10.5 billion hryvnia for 92.79% of the operator's shares ($1.33 billion at the then exchange rate). The buyer must pay this amount (minus the 10% deposit already made) within 60 days. It was officially announced that EPIC plans to strengthen Ukrtelecom's market position in order to sell it to a strategic investor or put it on the stock exchange in 4-5 years.

Ukrtelecom has underinvested in the network for many years, said Mikhail Alekseev, managing partner of ACM-Consulting. Tariffs had to be kept on the verge, and sometimes beyond cost - due to political circumstances, then the actions of competitors waging price wars, he explains. The buyer of Ukrtelecom will have to either attract large-scale investments in the expansion and modernization of the company's network, or reorganize its business, Alekseev said.

A controlling stake in Ukretelecom went to the Ukrainian company ESU. It belonged to the Cypriot offshore company UA Telecominvest, which through another offshore company from the same jurisdiction EPIC Telecom Invest belonged to the Austrian EPIC.

By requesting permission to purchase Ukrtelecom from the Antimonopoly Committee of Ukraine at that time, ESU disclosed its ultimate owners (beneficiaries). They named five Austrian citizens - EPIC shareholders:

• Peter Goldscheider, then director of EPIC,
• Brigitte Goldscheider,
• Gustav Wurmbock,
• Marina Wurmbock and
• Franz Lanschutzer.

In Ukraine, they immediately suspected that some representatives of the Ukrainian elite were behind EPIC. Later, in 2013, System Capital Managment (SCM) Rinat Akhmetov acquired UA Telecominvest offshore for an unnamed amount along with its ESU and a controlling stake in Ukrtelecom.

Akhmetov was expected to create the third largest - after MTS and Kyivstar (part of the Vimpelcom group) - Ukrainian telecom holding. At this time, Akhmetov, together with Turkish Turkcell, owns the third largest mobile operator in Ukraine, Astelit (Life trademark), and the entrepreneur also controls a large alternative operator Vega.

But officially, an SCM representative denied suggestions about the group's connection with UA Telecominvest, which bought Ukrtelecom offshore.

Only in January 2018, the Ukrainian edition of Лига.нет published details of the proceedings in the London Arbitration, which took place between the offshore Raga Establishment (the new name EPIC) and the structures of the SCM group owned by oligarch Rinat Akhmetov.

Even at the beginning of the proceedings, it became clear that EPIC was not the ultimate owner of Ukrtelecom. The owner of Raga Establishment called himself the former owner of Rada Bank Denis Gorbunenko.

But, as follows from the decision of the London Arbitration (available at the disposal of CNews), at the time of the privatization of Ukrtelecom, EPIC acted in the interests of other, more senior representatives of the Ukrainian establishment. Details of this can be learned from the SCM position study, which asked the arbitration to reject the claims of Raga Establishment.

SCM indicated that during the purchase of Ukrtelecom, the group, at the insistence of the seller, did not have the opportunity to conduct due diligence (verification of the acquired asset). Subsequently, it turned out that the owner of Ukrtelecom did not fulfill the terms of privatization undertaken to invest $450 million in the operator and transfer the special communications network to the state.

Because of this, in 2017, the State Property Fund of Ukraine through the court demands the return of Ukrtelecom to state property. In addition, SCM accused sellers of misleading the Ukrainian authorities when providing information about their ultimate owners.

It follows from the SCM story that the group did not acquire Ukrtelecom of its own free will. In 2012, Rinat Akhmetov was asked about this by the then President of Ukraine Viktor Yanukovych. Allegedly, he was concerned about the ability of the owner of Ukrtelecom to maintain this asset. On the part of Yanukovych, negotiations on the resale of Ukrtelecom were led by one of his close associates, Sergei Arbuzov, who at different times held the posts of head of the National Bank of Ukraine, deputy prime minister and other positions.

Akhmetov instructed to negotiate one of the top managers of SCM Ilya Arkhipov. He, in turn, attracted the Kyiv lawyer Yaroslav Simonov for negotiations. It was from Simonov's testimony given to the London Arbitration that information about the true beneficiaries of Ukrtelecom's privatization became known.

During the first meeting on the resale of Ukrtelecom, held in August 2012, Yaroslav Porokhnyak, one of the close associates of the famous Ukrainian politician and businessman Valery Khoroshkovsky, participated in the negotiations on behalf of the sellers. Khoroshkovsky in 2010-2012. headed the Security Service of Ukraine (SBU), then was Minister of Finance and Deputy Prime Minister. He also owned Inter TV channel and other media assets merged into Inter Media Group.

It was Khoroshkovsky, as was established during the arbitration hearings, who was the beneficiary of the privatization of Ukrtelecom in 2011. True, the London arbitration was never able to understand whether it remained so as of the date of the conclusion of the agreement on the privatization of Ukretelecom - March 11, 2011.

But, in any case, Khoroshkovsky was the ultimate owner of Raga Establishment by the time the purchase of this Ukrtelecom offshore company was completed on May 11, 2011. This became known from the testimony given to the London Arbitration by another witness, former head of Group DF Robert Shetler-Jones. This company belongs to the famous Ukrainian businessman Dmitry Firtash, who also turned out to be a secret participant in the privatization of Ukrtelecom.

From the words of Shetler-Jones, it follows that Raga Establishment raised a loan of $300 million from Bank of Cyprus to finance the purchase of Ukrtelecom. The guarantor for this loan was one of Firtash's structures - the Cypriot Picabo. The corresponding agreement was concluded on May 2, 2011, and then Khoroshevsky was definitely the owner of Raga Establishment. That is, the privatization of Ukrtelecom was carried out in the interests of the current head of the Security Service of Ukraine.

There is no final clarity regarding Firtash's role in the privatization of Ukrtelecom. Yaroslav Simonov says that in 2012 Khoroshkovsky owned only 24.99% of Raga Establishment, and SCM wanted to limit itself to buying only this share. However, the Ukrainian government insisted that SCM fully buy out the controlling owner of Ukrtelecom.

After that, at the beginning of 2013, Group DF joined the negotiations. Simonov claims that Dmitry Firtash's company owned a 75.01% stake in Raga Establishment, Sergei Arbuzov allegedly informed him about this. Moreover, according to Simonov, in the summer of 2013, at the time of the conclusion of an agreement with SCM on the sale of a controlling stake in Ukrtelecom, Firtash bought Khoroshkovsky's stake and became the sole owner of Raga Establishment.

However, Raga Establishment itself denies this. During the hearing, a company representative said that Gorbunenko acquired Raga Establishment from its sole owner Valery Khoroshkovsky, and Group DF only participated in raising funding.

Shetler-Jones also claims Group DF was not a co-owner of Raga Establishment. The company only participated in raising funding for the purchase of Ukrtelecom, Firtasha asked Khoroshkovsky about this, with whom they were on good terms.

Firtash and Khoroshkovsky really had a good relationship. In 2009, during the conflict between the Ukrainian authorities and Rosukrenergo, Khoroshkovsky, then holding the post of head of the State Customs Service, unexpectedly supported Firtash, which caused indignation from Prime Minister Yulia Tymoshenko. In addition to the fact that in 2013 Khoroshkovsky sold Firtash to Inter Media Group^[3]

3G license allocation to a separate Trimob company

In addition to fixed communications, Ukrtelecom also owns the only To Ukraine communication third-generation cellular license in the UMTS standard. Having bought Ukrtelecom, EPIC allocated a 3G license into a separate structure - Trimob - and was going to sell it. But it never happened.

Q1: Loss 200.2 mln UAH

Ukrtelecom's net loss for the first quarter of 2011 amounted to UAH 200.2 million, which is 5.5 times more than the loss received for the same period last year, the company said in its report yesterday. At the same time, net revenue decreased by only 2.65%, to UAH 1.631 billion. The company showed an operating loss of UAH 101.6 million against UAH 42.3 million of operating profit a year earlier.

According to the results of the first quarter of 2011, the negative financial result decreased by 5.5 times. The company traditionally explains unprofitability by the need to provide social services at state rates. At the same time, the company increased capital expenditures by 13%, primarily in the development of Internet access. However, experts doubt that the company will be able to get an adequate return on these investments, and therefore the operator's stock quotes decreased yesterday.

The drop in revenues in the report is traditionally explained by a 15.9% reduction in consumption of fixed-line telephony services, and loss-making by the need to provide local communications, telegraph and wired broadcasting services at government rates below cost.

Ukrtelecom notes an increase in expenses in other areas of activity. Thus, the company increased sales costs by 13%, to UAH 199 million. Ukrtelecom notes a slowdown in income growth from the most profitable type of activity - Internet access services - more than twice, which was caused by high competition in the market. However, the company continues to invest in this area, counting on further revenue growth in settlements where there is no competition. Thus, during the first quarter, sites for 19.5 thousand new connections in rural areas were put into operation.

2010

Revenue $1 billion, loss $32 million

According to its own data, it occupies 71% of the local telephone communication market and 83% of the long-distance communication market in Ukraine. Revenue - UAH 8 billion ($1 billion). Net loss - UAH 258.8 million ($32.5 million).

Competition for privatization of the company announced, objectionable participants were cut off, asset valuation

In October 2010, a competition was announced for the privatization of 92.79% of the company. The conditions for the sale of the state-owned stake in Ukrtelecom initially contained restrictions that did not allow many potential buyers to participate in the tender. In particular, companies that are 25% or more owned by Ukraine and a foreign country or have structures among their co-owners that belong to any state by at least a quarter are not allowed before the tender.

Because of this, Rostelecom"," Deutsche Telekom Norwegian, Telenor Swedish, the Finnish TeliaSonera as well as Vimpelcom "" were cut off from the tender (Megaphone their large shareholders are, respectively, Telenor and TeliaSonera). Vimpelcom did not pass under another restriction: the potential buyer of Ukrtelecom should not receive more than 25% of the income of the Ukrainian market for any communication services.

In December 2010, the State Property Fund of Ukraine (FGI) announced a competition to choose the appraiser of the state stake Ukrtelecom. According to the head of the FGI, Alexander Ryabchenko, the need to choose an appraiser is caused by the fact that only one company has applied for participation in the privatization of Ukrtelecom - this is the Austrian European Privacy & Investment Corporation (EPIC). After the news of such a weak interest in Ukrtelecom, the company's shares on December 21, 2010 fell by 8% on the Ukrainian stock exchange to 0.57 hryvnia per share ($0.07).

Applications for the competition for the assessment of the state stake "Ukrtelecom" were accepted until December 30, the choice of the appraiser is scheduled for January 6, 2011, it will take 30 days to evaluate the shares themselves. The result of the assessment cannot be lower than the starting price that the state set for the sale of its 92.7% stake in Ukrtelecom - 10.5 billion givens ($1.32 billion).

Russians also showed interest in the operator - primarily MTS and Rostelecom. MTS got acquainted with the tender documentation and withdrew from the number of applicants. "This asset does not meet our investment criteria," Mikhail Shamolin, then president of MTS, explained to Vedomosti in December 2010.

Notes