Rinat Akhmetov, Ukraine’s richest billionaire, will get slightly richer after Ukraine’s state regulator auctions off the rights to the 4G frequency band at the end of January.
Akhmetov’s company MMDS-Ukraine, which owned the right to use the frequencies for years, will get half a billion hryvnias ($17.5 million) in compensation. This money will be paid by three bidders – Kyivstar, Vodafone, and lifecell.
The auction, scheduled on Jan. 31, covers seven frequency lots in the 2500 – 2700 MHz band, and is expected to raise almost Hr 2.3 billion ($80.7 million) for the state budget, according to the National Commission for State Regulation of Communications and Informatization.
As a part of Akhmetov’s System Capital Management group, telecoms company MMDS-Ukraine obtained 2600 MHz licenses in 2011 – reportedly without a tender. This was years before Ukrainian mobile operators even rolled out 3G technology.
Ukraine is already a decade behind western countries in the use of 4G/LTE networks. Last year, the state regulator decided to convert and release frequencies in the 1800 MHz and 2600 MHz bands to speed up the transition. As a holder of the 2600 MHz range, MMDS-Ukraine was promised compensation of Hr 500 million ($17.5 million), which is almost the highest amount possible, as the law states that “it can’t exceed 25 percent of the cost of the frequencies.”
In an investigation, Ekonomichna Pravda website argues that the compensation is “overblown and groundless” and could be smaller.
It claims that over the entire period of owning the frequencies, MMDS-Ukraine didn’t use them and paid only Hr 6.68 million ($234,400) to the state budget.
There is also evidence that MMDS-Ukraine is a shell company, the investigation read. “The real purpose of the owner was to hold on to the frequencies for 4G for many years in order to resell them for a significant sum of money,” it read.
The state regulator didn’t substantiate why it had approved this sum of compensation for MMDS-Ukraine.
Another auction, for frequencies in the 1800 MHz band, is scheduled for Feb. 26 and is expected to bring in almost Hr 4 billion ($139 million).
