On 9 December 2014 the National Commission for the State Regulation of Communications and Informatisation of Ukraine (the “Commission”) announced a tender to award licenses for 3G communication in an IMT-2000 (UMTS) standard.

Previously, the Commission adopted the terms and conditions of tender (the “Tender Conditions”) which were approved by the Ukrainian government and made public at the beginning of December 2014.

Offered Lots

According to the Tender Conditions, the Ukrainian government offers three licenses each of which will ensure 30 MHz of frequency bands coverage in each region of Ukraine (specifically in the following bands: 1920-1935/2110-2125, 1950-1965/2140-2155 and 1965-1980/2155-2170 MHz).

Each license will be valid for a period of 15 years.

Bidders’ Eligibility

  • Only Ukrainian residents are eligible to bid for a license.
  • The companies which are subject to sanctions under the Law of Ukraine “On Sanctions” will not be allowed to bid.
  • One bidder will be awarded with one license only.
  • All bidders must submit the documents listed in the Tender Conditions, including: (i) a tender proposal (a corporate decision to bid for a license); (ii) documents about the bidder (a formal application; financial information about the bidder; information about the bidder’s staff, etc.); and (iii) the bidding price.

Price for a License and Other Costs

UAH 2.7 billion (ca. EUR 135 million) was announced as a starting price for each license.

In addition, each successful bidder will have to partially cover the cost of the conversion required to free up certain frequencies currently allocated for military purposes. The total cost of the conversion was announced to be UAH 1.6 billion (ca. EUR 80 million) and each successful bidder will have to cover at least UAH 530 million (ca. EUR 28 million).

Successful bidders who have not yet obtained a license to provide mobile telecommunication services in Ukraine (which is required along with a license to use the radio frequency resources of Ukraine) (the “Business License”) will have to obtain it as well. Obtaining a Business License costs UAH 14 million (ca. EUR 700,000).

Tender Procedure

The bids will be accepted from 15 December 2014 until 15 January 2015.

The tender will be held as a voice trading (unless there is only one bidder) during 16 February 2015.

Each bidder will have to pay a tender security in the amount of UAH 270 million (ca. EUR 13.5 million) 3 days prior to the tender day. A tender security payment is generally refundable 10 days after the tender results are announced (with some exceptions applicable to the successful bidders and those who have been in breach of the tender process, including the process of awarding a license).

Commitments of the Successful Bidders  

Once the license is issued in favour of a successful bidder, it will have to ensure that:

  1. all regional centers of Ukraine are covered with 3G communication (within the bands granted to that successful bidder) within 18 months from the date of the license issuance;
  2. all settlements with a population of over 10,000 are covered with 3G communication (within the bands granted to that successful bidder) within the period of 2 to 6 years from the date of the license issuance;
  3. its portion of the cost of the radio frequency conversion is duly financed;
  4. an approval of the Anti-Monopoly Committee of Ukraine, if required, is duly obtained; and
  5. it is compliant with other formal requirements to be able to start providing mobile telecommunication services in Ukraine.

The Tender Conditions are available at the Commission’s websitehttp://nkrzi.gov.ua/index.php?r=site/index&pg=99&id=705&language=uk.

Regulations:

Resolution No 1181-p of the Cabinet of Ministers of Ukraine “On Approving Terms and Conditions of the Tender for the Assignation of Licenses on the Use of Radio Frequency Resource of Ukraine for the implementation of Radio Technology “Digital cellular radio communication IMT-2000 (UMTS)” in radio frequency bands: 1920-1935/2110-2125, 1950-1965/2140-2155, 1965-1980/2155-2170 MHz” dated 05 November 2014; and

Tender Conditions for assignment of licenses on the use of radio frequency resource
of Ukraine for implementation of radio technology “Digital cellular radio communication IMT-2000 (UMTS)” in the radio frequency bands: 1920-1935/2110-2125, 1950-1965/2140-2155, 1965-1980/2155-2170 MHz, approved by the Decision No 730 of the National Commission for the State Regulation of Communications and Informatisation of Ukraine, dated 28 October 2014 (as amended by the Decision No 761 dated 18 November 2014 and Decision No 782 dated 01 December 2014 issued by the National Commission for the State Regulation of Communications and Informatisation of Ukraine).