MTS Ends Ukraine Services as Russia Reviews Crimea Telecom Options

MTS Ukraine is ending services in the Crimea amid claims that it has been forced out by the Russian backed authorities. The Crimea region of Ukraine was annexed by Russia in March 2014.

Russian operator K-Telecom launched a replacement service on July 4, one day earlier, using the same GSM-900 MHz and 1800 MHz frequencies that MTS occupied. According to Crimean Deputy Prime Minister and Minister of Communications Dmitry Polonsky K-Telecom’s new service will be operational in the capital Simferopol and surrounding areas within 2 days. K-Telecom was also allocated 3G spectrum by the State Commission for Radio Frequencies in May.

MTS Ukraine is the largest mobile operator in Crimea with a 57% share of the market, which represents around 1.3% of MTS Group’s total revenue. Other operators in the Crimea are Kyivstar, owned by VimpelCom, with a 21% market share and Astelit’s Life:) GSM which is majority owned by Turkcell and has a 16% market share. In the pre-March 2014 boundaries of Ukraine which included Crimea, Kyivstar was the market leader.

Russian owned MTS Ukraine has has disabled its network in Simferopol and will stop operating in other regions of the Crimea over the next 48 hours amid accusations that the authorities are freezing it out of the area. This is denied by Polonsky who says “It is not the will of the Republic of Crimea” and that the carrier is quitting of its own accord.

It is not clear exactly who K-Telekom are. The main CSP using this name operates in Armenia and is owned by none other than MTS. It may be that the change is little more than a rebranding exercise, a way of cutting MTS subsidiary MTS Ukraine out of the business and of reducing Kyiv’s power and influence in the Crimea.

Meanwhile Russia’s Minister of Communications Nikolai Nikiforov has announced that further auctions of spectrum may take place in Crimea. Nikiforov claims that the existing distribution of frequencies in Crimea is very ineffective and requires harmonisation. It is suggested that an exchange of frequencies between operators may take place to increase the available range.

Were this to happen it is expected that MegaFon and Rostelecom-Tele2, which currently have no operations in the region, could decide to join existing operators and submit bids.

However, the decision to continue operations in Crimea by MTS and VimpelCom could come under question as both companies have operations in Ukraine, which could be at risk. Any involvement in Crimean operations could also increase the risk of sanctions being imposed by the US and the EU.

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