6:25 AM Sunday, March 25, 2018 Wednesday, March 7
Ukraine’s big three mobile cos. bid $200 million for 4G; Foreign investment in Ukraine IT startups triples; President tells FT that voters will feel economic turnaround before 2019 election; Boryspil retail rent increases 4-fold
image/svg+xml Kyiv Lutsk Rivne Zhytomyr Lviv Ternopil Khmelnytskyi Uzhgorod Chernivtsi Vinnytsia Chernigiv Sumy Kharkiv Poltava Cherkasy Kirovohrad Lugansk Dnipropetrovsk Donetsk Zaporizhzhia Mykolaiv Odesa Kherson Simferopol Sevastopol Ivano- Frankivsk

Ukraine’s largest mobile phone operators -- Kyivstar, Vodafone and lifecell -- bid Tuesday to pay a total of $200 million for rights to 4G transmitting bands. Last month, the three companies paid almost $100 million for another set of frequencies. President Poroshenko said he hopes 4G service will be launched in Kyiv this summer, and in the other 23 regional capitals by end of this year.

New investment in Ukrainian IT companies hit $265 million last year, triple the level of 2016, according to a report by AVentures Capital. Of 44 deals signed last year, 90% were with four foreign equity funds: General Catalyst, IVP, Spark and Almaz Capital. Overall, foreign capital accounted for 96% of total investment, compared to a 50-50 split with local capital in 2016. According to Dealbook of Ukraine, Ukrainian startups last year attracted investment from: venture funds – 90%; angels -- 6%; and crowdfunding platforms -- 3%.

Speaking with the Financial Times, President Poroshenko calculates that in the year leading up to the March 2019 presidential elections, Ukrainians will see tangible benefits of the free market changes of the last three years and a surge this year in public spending. He said local budgets have increased seven fold and this year’s road building spending will be triple the level of 2015. “Most of the reform that happened two or three years ago is starting to show results now this year,” he told FT’s visiting Eastern Europe editor Neil Buckley. “[There] is a rise in our living standard. [There] is a de-shadowing of the economy. [There] is decentralization.”

Poroshenko said he had not decided whether to run for re-election but warned about populists. Interviewed at the time of Italy’s vote, he said: “If the people want populists, if they want to have a Venezuelan-style economy, they should not support me…There is a danger of populist campaigns, definitely, yes. Sorry, but that can happen in any European country.”

On Gazprom breaking its gas supply contract to Ukraine last Thursday: “We received the invoice, paid, and the gas was not supplied. We have absolutely clear procedure in the court that Russia should [pay] a penalty for that. This is a case about if Russia in general can be a reliable energy supplier.” Poroshenko implied that, after Russia’s March 18 presidential vote, Ukraine would resume gas purchases, based on a December Stockholm arbitration court order. He said: “We should buy at least 4bn cubic meters of Russian gas a year, which is not widely acceptable among Ukrainian people, who are asking why we are buying from a country who undertakes aggression against Ukraine? But we fulfil all the decisions of the court.”

Gazprom has appealed the Stockholm court ruling on Ukrainian gas deliveries that triggered last week’s Russia-Ukraine gas crisis. In that ruling, a Stockholm arbitration court ruled that Gazprom had to pay Naftogaz net $2.6 billion. Gazprom also is asking a Stockholm court to end a 10-year contract to supply Ukraine with natural gas. Signed in 2009, that contract ends Dec. 31, 2019.

Gazprom should compensate Naftogaz for overpaying for gas by 34 percent, Naftogaz deputy chief executive Yuri Vitrenko says. He writes on his Facebook page: “34 percent overpayment for imported gas in March will be compensated not by Ukrainians, but by Gazprom.” Concorde Capital’s Alexander Paraschiy writes: “It seems like Gazprom is still not intending to supply Naftogaz with any natural gas, even though the court obliged the Ukrainian company to buy from Russia no less than 4 bcm annually in 2018-2019…Also, we stick to our expectation that Gazprom won’t pay Naftogaz the amount awarded by the Stockholm court in cash.”

Naftogaz will open an office in Germany, which also will represent the interests of the state company in Austria and Switzerland. At the same time, Naftogaz is closing its office in Moscow, effective Monday.

Ukraine should invest to adapt its gas transport system to a looming decline in gas transit volumes, writes Oleksandr Dombrovsky, acting head of the Rada fuel and energy committee. Writing with gas expert Leonid Unihovsky in ZN.UA, he calls for “the switch to liquefied gas in the places where it is inefficient to supply gas to consumers using pipelines and taking some gas pipelines and compressor stations out of service.” If construction of Nord Stream 2 proceeds this year, Ukraine should invest next year to modify its pipeline system.

While currency counterfeiting is rare in Ukraine, 500 hryvnia notes, the largest in circulation, account for the lion’s share of the fakes, the National Bank of Ukraine reports. In 2017, their share in the total number of counterfeit banknotes increased to 61%, from 38% in 2016. Most seized counterfeit notes - 81% - were made using inkjet and laser printers. Most were passed through supermarkets, fast food stores, and metro ticket windows. Counterfeit foreign notes withdrawn from circulation reflect Ukraine’s increasingly Western orientation: US dollars – 78%; Euros - 16%; and Russian rubles - 6%.

The delay in loans from the IMF is forcing to Ukraine to maintain a requirement for firms to sell 50 percent of their foreign currency income, Deputy Central Bank Governor Oleh Churiy tells reporters.

Romania’s state-owned pharma company Antibiotice will expand this year to Moldova and Ukraine, according to a statement by the Bucharest Stock Exchange.

Registrations of imported used cars for the first time surpassed registrations of imported new cars, reports Ukrautoprom, the car industry association. In February, 6,166 imported used cars were registered. From August 2016 through this December, a law allows individuals to import one used car a year at lower excise tax rates. With the presidential election next year, this popular law is expected to be extended.

An open auction for a 315-square meter retail space in Boryspil Aiport’s Terminal D resulted in the monthly rent increasing four fold – to $174 per square meter. Vitaliy Trubarov, acting head of the State Property Fund, reported the rent jump on his Facebook page. In its third year of growth, Boryspil’s passenger flow increased by 22% last year to 10.5 million. The Infrastructure Ministry has set a 5-year goal of doubling to 20 million by 2022.

Delta Air Lines, the largest American carrier, has completely abandoned flights to Russia, deciding not to renew seasonal flights this summer from New York to Moscow. Delta started cutting back flights to Moscow in 2015 due to falling passenger numbers.

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