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9 April 2018 Week 13 The Business Week www.ukraineinvest.com 21 st century telecommunication arrives in Ukraine as the major service providers roll out 4G and 4G+ Ukraine Business Journal Poroshenko celebrated 4G arrival, writing on Facebook: «Communication of the fourth generation from now in Ukraine. Mobile operators launch 4G in more than twenty cities of Ukraine! I congratulate Ukrainians on the introduction of 4G!» Earlier in his presidency, in 2015, Ukrainians received 3G mobile service. Agriculture T. B. Fruit, one of Ukraine’s largest fruit processors, has built a pectin production line at its juice factory in Horodok, Lviv region. Extracted from citrus fruits, pectin is largely used as a gelling agent for jams and jellies. The Lviv factory will produce about 1,500 tons a year, with the opportunity to increase to 3,000 tons. While Ukraine will need more pectin as food processing increases, world pectin demand is 40,000 tons and growing annually by 5%. Roman Zuzok, vice president for sales and corporate development, tells Interfax-Ukraine that T.B. Fruit plans to join the International Pectin Producers Association. Two large potato producers plan to build factories to produce French fries. Next year, Vegetable Group and Adelaide will open production facilities in Zhytomyr region. Recently, Vegetable Group recently sent a shipment of frozen fries from its new plant in Chernihiv to Israel. Millions of Ukrainians are upgrading their cell service to 4G this week as two of the top three mobile operators, Vodaphone Ukraine and Lifecell, say 4G service will be up and running in the nation’s largest cities. Kyivstar will follow next week, by April 10. Kyivstar president Peter Chernyshov writes on Facebook: “It is important for us that our subscribers get a positive experience of using the service. Quickly does not always mean quality.” Subscriber bases are: Kyivstar - 26.5 million; Vodafone Ukraine -- 20.8 million; Lifecell -- 8 million. Vodafone Ukraine launched Ukraine’s first 4G mobile service over the weekend in Kyiv and 19 cities, Olha Ustinova, company CEO told reporters Thursday. By Monday, this fast service is to be available at Boryspil airport and in nine regional capitals: Chernivtsi, Dnipro, Ivano-Frankivsk, Kharkiv, Kherson, Lutsk, Odesa, Poltava, and Sumy. Vodaphone Ukraine estimates that one third of its subscribers have 4G capable smartphones. It predicts that 4G will double average traffic consumption per subscriber. Vodafone Ukraine also plans to increase its Vodaphone store network 10-fold – from 30 today to 300-350 by the end of next year. The three mobile phone companies paid a total of $300 million last month for 4G licenses. President The Business Week is written and produced for UkraineInvest by the Ukraine Business Journal

The Business Week Week 13 9 April 2018 - …...9 April 2018 The Business Week Week 13 21st century telecommunication arrives in Ukraine as the major service providers roll out 4G and

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9 April 2018

Week 13The Business Weekw

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om 21st century telecommunication arrives in Ukraine as the major service providers roll out 4G and 4G+

Ukraine Business Journal

Poroshenko celebrated 4G arrival, writing on Facebook: «Communication of the fourth generation from now in Ukraine. Mobile operators launch 4G in more than twenty cities of Ukraine! I congratulate Ukrainians on the introduction of 4G!» Earlier in his presidency, in 2015, Ukrainians received 3G mobile service.

Agriculture

T. B. Fruit, one of Ukraine’s largest fruit processors, has built a pectin production line at its juice factory in Horodok, Lviv region. Extracted from citrus fruits, pectin is largely used as a gelling agent for jams and jellies. The Lviv factory will produce about 1,500 tons a year, with the opportunity to increase to 3,000 tons. While Ukraine will need more pectin as food processing increases, world pectin demand is 40,000 tons and growing annually by 5%. Roman Zuzok, vice president for sales and corporate development, tells Interfax-Ukraine that T.B. Fruit plans to join the International Pectin Producers Association.

Two large potato producers plan to build factories to produce French fries. Next year, Vegetable Group and Adelaide will open production facilities in Zhytomyr region. Recently, Vegetable Group recently sent a shipment of frozen fries from its new plant in Chernihiv to Israel.

Millions of Ukrainians are upgrading their cell service to 4G this week as two of the top three mobile operators, Vodaphone Ukraine and Lifecell, say 4G service will be up and running in the nation’s largest cities. Kyivstar will follow next week, by April 10. Kyivstar president Peter Chernyshov writes on Facebook: “It is important for us that our subscribers get a positive experience of using the service. Quickly does not always mean quality.” Subscriber bases are: Kyivstar - 26.5 million; Vodafone Ukraine -- 20.8 million; Lifecell -- 8 million.

Vodafone Ukraine launched Ukraine’s first 4G mobile service over the weekend in Kyiv and 19 cities, Olha Ustinova, company CEO told reporters Thursday. By Monday, this fast service is to be available at Boryspil airport and in nine regional capitals: Chernivtsi, Dnipro, Ivano-Frankivsk, Kharkiv, Kherson, Lutsk, Odesa, Poltava, and Sumy. Vodaphone Ukraine estimates that one third of its subscribers have 4G capable smartphones. It predicts that 4G will double average traffic consumption per subscriber. Vodafone Ukraine also plans to increase its Vodaphone store network 10-fold – from 30 today to 300-350 by the end of next year.

The three mobile phone companies paid a total of $300 million last month for 4G licenses. President

The Business Week is written and produced for UkraineInvest by the Ukraine Business Journal

Banking & Finance

In the latest easing for foreign exchange controls, the National Bank of Ukraine implemented Friday five liberalization measures. Steps include: lifting some restrictions on early repayment by foreign companies of foreign currency loans; expanding the list of business operations not subject to mandatory sales of foreign exchange earnings; simplifying the transfer of foreign currency abroad to make payments related to litigation processes.

Business

UkrOboronProm, the state-owned defense conglomerate, is cutting 40% of senior management, from 286 to 180, under a new management strategy implemented by Pavlo Bukin, who took over Feb. 21 as director general. UkrOboronProm’s press office says: “The funds saved will be allocated to introducing new research and design activities.” A new four-member Supervisory Board oversees the holding company, which includes 130 defense-related companies. This new board approved the contracting of Baker McKenzie, Grant Thornton, DLA Piper Ukraine, The Boston Consulting Group, Dentons Europe, Ernst & Young Audit Services, Deloitte & Touche USC and Roland Berger as consulting companies to carry out a 2-year, $5 million audit of the state company.

Koton, a Turkish clothing store brand, is crossing the Black Sea this spring and opening its first two retail outlets in Kyiv. By 2020, Koton plans to expand it network to 15 sites, Alper Akin, Koton chief of development, said Thursday at Retail & Development Business Expo-2018 in Kyiv.

MHP, Ukraine largest poultry producer, is ready to invest EUR 76 million in the partial restoration of France’s ailing Doux Group, the agro holding tells Interfax-Ukraine. In negotiations with a French government restructuring committee, MHP offers to build a new poultry processing plant in Chateaulin, Brittany, and to change the company’s strategy from exporting frozen chickens to selling fresh chickens to French consumers.

Ukrainian apples, berries, onions, tomatoes and walnuts will find new markets in Israel after the Free Trade Agreement with Israel is signed in coming months. The Ukrainian Fruit and Vegetable Association analyzes the Israeli market and sees niches that Ukrainian produce can fill. The Association warns members: «It will not be easy to deliver products to Israel, because this country is a net exporter of premium-quality produce, competition in the market is high, and quality requirements are even higher.»

Automotive

In a politically popular move that could change the face of Ukrainian transportation, Rada deputies propose that cars be imported after owners pay flat fees of 500 euros. This single fee would replace VAT and excise duties that often top 6,000 euros. The new fee would apply to new cars and used cars less than 10 years old. Rada Deputy Oleksandr Shevchenko from UKROP, or the Ukrainian Association of Patriots, tells UNIAN: «In our time, a car is really not a luxury, but a means of transportation. It is needed for everything – for families, to go to doctors when they are sick, for entrepreneurs, to be mobile and have time to do business, for average people, to visit relatives, travel and relax.”

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refused to pay the $2.6 billion settlement with Naftogas. Kruglov did not say which quarter will be affected, Reuters reports.

In Kyiv, Justice Minister Pavel Petrenko told reporters Thursday: «I am convinced that Gazprom has no chance to escape liability, and the amount of debt recorded by the court decision will only increase, and it will be fully recovered in the near future.» Referring to his plans to seize Gazprom assets outside of Russia, he added: «The ostrich hides its head in the sand. But the rest of the body remains on top. This other part of the body is the assets, the property that Gazprom has around the world.»

Thirteen new gas wells will open this year in Lviv, the largest gas producing region for LvivGasVydobuvannya, Ukrinform reports. This state company produces gas from 40 deposits in five regions of Western Ukraine.

President Poroshenko signed a law Thursday cutting much Soviet-era red tape surrounding oil and gas prospecting and extraction. Landowners now can largely exploit their subsoil deposits without permission from Kyiv. Special permits are not needed to move soil for additional drilling. A state agency no longer has a monopoly on geological and economic assessment of oil and gas reserves. Oil and gas producers can use easements to build pipelines across land they do not own. The government has a set a target: self-sufficiency in gas by 2020.

Infrastructure

Ukraine plans to dredge all its Black Sea ports this year, Raivis Veckagans, head of the Ukrainian Sea Port Authority, tells reporters. On Thursday, he is to sign a

Viewed by more than 600,000 people, The Stolen Princess has sold $1.7 million in tickets in Ukraine, Romania and Turkey. Box office receipts for this animation love story are twice those of Cyborgs, making it the best selling Ukrainian film of the year, according to FILM.UA Group, parent company of the production studio, Animagrad. Sold for distribution in more than 50 countries, Princess will be released this month in Croatia, Bosnia and Herzegovina, Bulgaria, Egypt, United Arab Emirates, Kuwait, Lebanon, Jordan, Qatar, Oman, Bahrain, Vietnam, and Lithuania.

Commodities

The largest union at the nation’s largest steel mill, ArcelorMittal Kryvyi Rih, has adopted a resolution demanding that the average monthly wage be raised to EUR1,000, currently UAH 32,600. Across Ukraine, the average monthly wage is UAH 7,828. In advance of a March 14 rally for EUR 1,000, company officials promised to increase wages, taking into account inflation, productivity and world steel prices.

Energy

The Cabinet moved Thursday to postpone hikes in household gas prices for at least two months. The IMF has made the resumption of aid to Ukraine contingent on Kyiv gradually raising household gas prices to close the 30% price gap with imported gas.

Gazprom acknowledges its profits will take a hit from a ruling by Stockholm’s arbitration court on gas deliveries to Ukraine, Chief Financial Officer Andrei Kruglov said Thursday in Moscow. To date, Russia’s state gas producer has

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Zubko, vice prime minister, tells 112 Ukraine TV. “People go abroad to seek not only higher wages, but also safe living conditions.»

For Ukrainians to see real changes in their living standards, the economy should grow by at least 6 to 8% a year, Anatoliy Kinakh, president of the Union of Industrialists and Entrepreneurs, told an anti-crisis meeting. «After the downfall in 2014-2015, when Ukraine’s GDP dropped by 17%, an increase of 2-3% is essentially stagnation. It is conservation of the crisis,» Kinakh said, UNIAN reports. “For dynamic growth, for qualitative changes in the components of people’s lives, Ukraine needs a pace of at least 6-8%, and, it is desirable, 10%.» At the end of last year, the Union released a «Platform of Economic Patriotism» – a package of pro-growth measures that included tax cuts, property rights protection and steps to prevent and break up monopolies.

Telecommunications

Vodaphone offers standard fourth generation technology. Lifecell offers faster speeds with 4.5G or LTE Advanced. According to lifecell, a subsidiary of Turkcell, 49% of smartphones on the lifecell network can support LTE technology. A lifecell press release says: «Traffic 3G + and 4.5G will be charged the same.” Lifecell’s 4.5G service is now in 22 regional capitals and in Kramatorsk and Severodonetsk. A second wave of cities will be connected in July.

Travel

According to data from mobile phone companies, about 30 million Ukrainians annually travel around the country,

$17 million contract with China Harbor Engineering Company Ltd. to dredge 2 million cubic meters from the port and approach channels of Chornomorsk. Two months ago, China Harbor dredged Yuzhny, Ukraine’s busiest port, to a depth of 16 meters. On Tuesday, Veckagans said his agency is mulling further dredging of Yuzhny, to 21 meters. This depth would accommodate the 300,000 ton ships that are to pass through a new channel, parallel to the Bosphorus, that Turkey plans to open in five years.

Driving time from Odesa to Ukraine’s Danube port of Reni will be cut in half when work is completed this year on the 189 km road, President Poroshenko writes on Facebook. Providing a stimulus to regional tourism, it will take three hours to drive from Odesa, through Ukrainian Bessarabia, to Reni, a small city which borders Moldova and faces Romania across the Danube.

Infrastructure Minister Volodymyr Omelyan wants the government to spend $370 million to rebuild runways at five regional airports next year. He spoke at a Carpathian transport conference in Ivano-Frankivsk, Ukrinform reports. Of the three airports in the Carparthians, Uzhhorod has not had commercial service in two years. Ivano-Frankivsk and Chernivtsi are only connected to Kyiv by UIA Embraer commuter jets. Talking to UBJ.am, Omelyan said recently: “Most Ukrainian airports were built in the ‘50s and ‘60s, with very poor quality runways -- concrete blocks pushed into the ground. They are only good for small aircraft, not Boeings.”

Social

“Loss of human resources” increasingly worries the nation’s leadership, Hennadiy

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significant role in steering the country away from crisis to macroeconomic stabilization; commenced a program of robust decentralization; introduced ‘Prozorro’ a world class procurement system; unbundled energy sector monopolies, implemented police reform and signed a Free Trade and Association Agreement with the European Union. As always, Ukraine’s international partners provided support and guidance to this unprecedented transformation process.

Important as these achievements were, they are only the beginning. In April 2017 the Government adopted its Strategy 2020 with the goal of boosting economic growth to 5-7% by 2020, thereby ensuring long-term prosperity for all Ukrainians. The plan also lays the groundwork for positioning Ukraine as the Eurasian Hub, where it can use its geographic and market advantage to compete at the crossroads of two of the world’s largest economic trading blocks, European and Asian.

We at UkraineInvest share this vision and pursue our 4+1 sector strategy which focuses on the key drivers of Ukraine’s economy: Agribusiness; Energy (especially renewables); Manufacturing; and Infrastructure, with Innovation Technology linking all of these sectors. At the same time, UkraineInvest’s message – that global supply chains can benefit from the innovation and opportunities offered by Ukraine’s “Brains and Grains” (especially in Ukraine’s fast-growing regions) – resonates positively with investors. Similar sentiments are expressed after they consider the massive potential of Ukraine’s untapped agri-food value chain; the attractiveness of Ukraine’s green tariff relating to renewable energy projects; the growth of European supply-chain manufacturing clusters in the regions, especially automotive cluster in Western

Mykhailo Tytarchuk, deputy minister for Economic Development and Trade, tells Ukrinform at Kyiv’s Ukraine International Travel and Tourism Exhibition. Population estimates for Ukraine vary from the official level of 42 million to unofficial estimates of 35 million.

UkraineInvest News

Intensive preparations continue for the transition of UkraineInvest from the status of an advisory body under the Cabinet of Ministers of Ukraine to that of a permanent state institution. UkraineInvest Director Daniel Bilak stated that, “Our team will continue working on attracting foreign investment to Ukraine thereby contributing to the implementation of the Government’s Strategy 2020, with the goal of boosting annual economic growth to 5-7% by 2020. We will also continue in our efforts to improve the image of Ukraine in the world and to duly promote the investment potential of the country.”

UkraineInvest Update

Ukraine is Innovation and Opportunity!

In four short years after the Revolution of Dignity, Ukrainian society has undergone a massive tectonic shift as it shed the legacy of its Soviet past and chose a pro-western democratic orientation which continues to gain strength and momentum every day.

Driven largely by the passion and determination of its youth, Ukraine is rapidly becoming a new country promoted by a young class of reform oriented leaders in science and government. In fact it was the latter who, following the Revolution in 2014, rose to the challenge and played a

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The Business Week is published in cooperation between the Ukraine Business Journal and UkraineInvest, and is a summary of news published in the Ukraine Business Journal daily edition. Nothing contained within this publication should be regarded as any form of recommendation to invest or divest. This publication may contain personal views, which are not the views of UkraineInvest nor the Ukraine Business Journal, its subsidiaries or associates unless specifically stated. The publisher does not carry any responsibility for views expressed in the publication. Designed and produced by Whites Communication LimitedRegistered Office: 14 Hackwood, Robertsbridge, East Sussex TN32 5ER© Whites Communication Limited, London, December 2017. All rights reserved.

Ukraine Business Journal

Ukraine remains poised to deliver on its investment promise and we value the opportunity to assist you in making Ukraine your investment destination.

Ukraine; and the opportunities offered in rebuilding Ukraine’s Soviet era port, road and rail infrastructure.

In fact, Innovation and Opportunity are two sides of a single coin that represent Ukraine’s strongest message to the international investment community. This is particularly evident in the meteoric rise of Ukraine’s IT sector, which in only five years, has exploded from a fringe economic activity to the country’s third largest export. In 2017 alone IT services grew by 20%, hitting $3.2 billion and in the next five years it is estimated to double in size! This fact alone places Ukraine well on its way to becoming the World’s Digital Workshop!

By the second half of 2017 it became distinctly noticeable that the earlier negative narrative about Ukraine’s Soviet past had begun to change. The sheer weight of the country’s comparative advantages and the vigorous commitment of the Ukrainian government to draft and pass additional key structural reforms in 2017, all sent a clear and decisive signal to the international community and to the financial markets as well. In fact these efforts were crucial to the success of the government’s Eurobond issue in the fall of 2017 - a key market indicator of trust in the government’s investor-friendly reforms.