Ukrtelecom changes its personnel and name
Ukraine's largest telecommunications company has lost its leader and will be merged with the Utel brand.
The chair of Ukrtelecom CEO Heorhiy Dzekon is shaky. Several publications reported that the company's supervisory board dismissed the chairman of the board. Five members of the supervisory board, all representatives of the Ukrainian state, voted in favor of this decision. The supervisory board consists of eight people in total.
The report was quickly refuted: Ukrtelecom stated that Dzekon had not yet been officially dismissed. At least, no official document confirming this decision exists yet. Moreover, company representatives believe that the decision allegedly dismissing Dzekon could be subject to investigation by law enforcement agencies.
Experts note that the main reason for Dzekon's dismissal may be the company's financial condition, which has been posting losses for several years in a row. However, Ukrtelecom's performance in 2009 was better than in 2008, with losses decreasing threefold. The main reason for the company's poor financial condition is fixed-line prices, particularly in rural areas, as well as losses from telegraph and radio services. The cost of these services is regulated by the state. Therefore, the company is unable to establish its own pricing policy, and even successful projects such as the introduction of a broadband service operating under the "OGO!" brand fail to cover these losses. Losses from these services last year amounted to approximately 1 billion hryvnias.
The second negative factor in Ukrtelecom's current state is the launch of upgraded next-generation (3G) communications services. Expanding this service requires significant investment, which is also currently negatively impacting the company's financial results.
Simultaneously with the news of Ukrtelecom's dismissal, it became known that the Utel mobile brand, under which Ukrtelecom sold next-generation communications services, would be integrated into the main brand.
Selling high-speed data services (mobile communications and internet access under the Utel brand) is also a positive factor for the company, driven by subscriber growth among users with above-average incomes who are willing to spend large sums of money on both mobile communications and high-speed internet.
In 2009, the company's revenue increased by 3.1% and amounted to UAH 8.138 billion. The company's net loss in 2009 amounted to UAH 456 million (in 2008, this figure was UAH 1.528 million).
Another reason for Dzekon's dismissal could be another attempt to privatize the company. The state has been trying to sell the telecommunications giant for the past three years, with varying success. Perhaps now, given the negative economic trends, the time has come to transfer one of its best assets to private hands.
