On 5 November 2014 the Cabinet of Ministers of Ukraine approved the Terms of 3G Spectrum Licenses Auction (the “3G Terms”), developed by the National Commission for Communications and Informatization of Ukraine (the “National Commission”) and aimed at launching 3G mobile communications technology in Ukraine.

The 3G Terms have been prepared on the basis of (i) Law of Ukraine on Radio Frequency Resource of Ukraine, (ii) Procedure for Attraction of Extrabudgetary Funds for Conversion of Radio Frequency Resource of Ukraine within Radio Frequency Bandwidths of General Use, (iii) Governmental Resolution on Certain Aspects of Conversion of Radio Frequency Resource of Ukraine within Radio Frequency Bandwidths of General Use, (iv) Tender Procedure for Licensing Radio Frequency Resource of Ukraine, (v) License Conditions on Use of Radio Frequency Resource of Ukraine, as well as other applicable laws of Ukraine.

The 3G Terms provide:

  1. For a tender for the right to obtain a 15 year license for three radio frequency bandwidths 1920-1935/2110-2125, 1950-1965/2140-2155, and 1965-1980/2155-2170 MHz on the territory of Ukraine;
  2. Minimum price of each license is UAH2.443 billion (approximately US$ 200 million);
  3. Expenses for conversion of radio frequency resource of Ukraine within the above radio frequency bandwidths will be covered by the winners of the auction according to the Plan of Conversion of Radio Frequency Bandwidths 1920-1935, 1950-1980, 2110-2125, 2140-2170 MHz to launch 3G mobile communications technology of IMT-2000 standard (UMTS) developed by the Headquarters of the Armed Forces of Ukraine, agreed by the Head of the National Commission and approved by the Minister of Defense of Ukraine on 23 September 2014. Such expenses total UAH1.6 billion;
  4. Winners of the auction must, within two months after the auction results are announced, agree with the National Commission the technical specifications which shall contain the terms and conditions of conversion, as well as notify the National Commission of execution of the agreement;
  5. Licensee must, in special circumstances of use of radio frequency bandwidth, within 18 months ensure the compliance with quality parameters of mobile communication and their marginal standards according to the applicable laws of Ukraine in all administrative centers of oblasts, and within six years – in all administrative centers of regions and all localities with population in excess of 10,000;
  6. According to the National Commission, the approved 3G Terms do not provide for any additional restrictions with respect to the bidders wishing to participate in the auction except for those envisaged by law with respect to application of sanctions to the legal entities under the Sanctions Law of Ukraine.

For the 3G Terms to become effective upon approval by the Cabinet of Ministers and for the National Commission to be able to announce the auction, they must be agreed by six institutions, namely, the Ministry of Defense, Ministry of Justice, Ministry of Finance, Ministry of Economy, Antimonopoly Committee of Ukraine, and State Service of Special Communication and Information Protection of Ukraine. Until then, the 3G Terms have not yet been made public and are in the process of approval.