Just over five years ago, SCM saw an opportunity and the need to build a telecoms champion for Ukraine when we acquired Ukrtelecom from its discredited previous owners, Raga/EPIC. As a business, we had the experience of transforming former state owned businesses in the industrial sector and knew that given the right strategy, people and investment, that we could do the same in the telecoms sector.
Immediately, we set about developing a strategic plan with the advice of leading international telecoms experts and began building a team of new, skilled and talented managers to transform the former state owned, voice traffic dependent Ukrtelecom into the backbone of Ukraine’s telecom and flourishing IT sector. Now some four years on from the start of this process, we have asked the same consultants to return and independently asses what had been achieved to date. The results are overwhelmingly positive.
Of the 23 strategic initiatives identified in 2014, which would transform the company’s performance 91% have been successfully implemented. Despite the difficult operating conditions, including the annexation of Crimea, the conflict in Donbass and troubled economy, the company succeeded in improving the business. Achievements include migrating almost 400,000 subscribers to next generation networks, raising average broadband access speeds by an impressive 36%, connecting 950 localities across Ukraine to Ukrtelecom’s broadband and launching a suite of new mission-critical business information systems to drive business efficiency.
New products have also been launched moving the company further from its past voice base to its IP driven future including: interactive TV, secure cloud services for business, as well as fiber, VDSL access and DDoS-attacks protection. As a result, Ukrtelecom is now the market leader in Ukraine in both IPTV and in serving business-to-business customers.
This transformation has brought with it financial stability and success. In 2017, EBITDA reached 28% with net profit at more thanUAH860 million and capital expenditures of UAH 1 billion on the network. In addition, over $400million of finance is in place to continue the network upgrade and move to fiber and increased network speeds. This performance compares well with other former state owned telcos in Eastern Europe.
So, despite the uncertainty created by the government’s desire to renationalise Ukrtelecom due to the failure of the previous owners to meet the conditions set during its initial privatisation, the business has continued to develop and improve its performance under SCM’s ownership and the excellent management under the leadership of Yuri and his team.
Whatever happens In the future, and whoever the owner may be, they will need to keep to the path set by SCM and Ukrtelecom’s management team and continue the successful transformation from a slow moving, outdated voice-based business to a dynamic market champion delivering international class IP services for Ukrainian consumers and business.
SCM and Ukrtelecom’s management, led by Yuri Kurmaz, and its employees can be proud of the transformation in performance and investment, which has taken place. SCM is proud to be the owner of the country’s only Ukrainian owned top 4 telecoms company and the backbone of the nation’s internet connectivity.
By Jock Mendoza-Wilson, Director of International and Investor Relations