Yaroslav Nitsak, Managing Director of Ericsson in Ukraine, Georgia and Armenia, told us about the sustainability of Ukrainian telecommunications market, quality of mobile service in Ukraine compared to Europe, and the development of mobile communications as a whole.
LDaily: Ericsson company has been operating on the Ukrainian market since 1995. Can you please name the amount invested for this period?
Y. Nitsak: It is difficult to calculate the amount of investments in Ukraine. We have been operating in Ukraine since 1995, however, our first equipment was installed here in 1893. Since the time when Ericsson started its business activities in Ukraine back in 1995 we have been constantly growing, increasing staff, and establishing partnerships with more and more customers. We pay all taxes. Over the last three years, the company has enhanced its presence in Ukraine – we have invested in the R&D center in Lviv. I can’t state the amount of investments, as this is confidential information. Nevertheless, I can confidently say there has been positive dynamics of our presence in the country.
LDaily: What is the market outlook of the operator’s equipment in Ukraine?
Y. Nitsak: In Ukraine it is exactly the same as in any other country of the world. We have four main competitors, and in Ukraine their distribution is somewhere on parity. We work with all major mobile service providers.
LDaily: Which communication service providers do you work with?
Y. Nitsak: We partner with all mobile service providers – lifecell, Kyivstar and Vodafone. As for the fixed-line operators, we have commitments towards Vega Telecom.
LDaily: Kyivstar was planning to switch over to Ericsson’s IT billing solutions. Why did not it happen?
Y. Nitsak: It is not the right time yet, however, this will happen for sure. Our companies have recently reviewed the scope of service and timeframe to upgrade core IT systems of Kyivstar. The project is in progress now. We have obligations and we will fulfill them.
LDaily: Is the Ukrainian market ready for the implementation of 5G?
Y. Nitsak: Our joint research project with Imperial College shows that a 10% increase in the mobile broadband adoption ratio causes a 0.6-2.8% increase in economic growth. There is a direct correlation between the mobile broadband penetration and GDP increase. What is mobile broadband? First of all, it’s 3G and 4G technologies. We see for Ukraine the main сhallenge is further development of 4G technology so that more subscribers could have access to the technology of the fourth generation before we start to talk about 5G. We have to become aware that the development of telecommunication technologies in the world happens approximately every 9-10 years. I mean that GSM (2G) technology was rapidly deployed in early 1990s, 3G – in early 2000s, 4G was first introduced in 2009-2010. Now, over 10 years, we observe the launch of 5G technology. In Ukraine we ran this journey within 3-4 year whereas other countries have done it within 20-30 years. We got 3G technology deployed only in 2015, the first LTE networks – in March 2018, and networks at 1800 MHz – on July, 1st. Not even a year passed since we launched 4G in Ukraine. That is why penetration of this technology is very limited – it is available only in large and middle-sized cities, in district or regional centres. If we talk about coverage on motor roads, railways, villages – it’s not yet there. Hence, we have to continue deploying 4G technology first of all. And, of course, when the market is ready, we will be able to support operators in 5G technology deployment. What is essential, both the market and consumers have to be ready for this.
LDaily: Can you predict the terms when the market will be ready?
Y. Nitsak: It depends on how fast we make the way to 4G technology evolution, to level up with western countries. 5G is not only the technology for smartphones and subscribers, it will transform lives and industry sectors. Once demand is there , we will surely respond to it as a developer and equipment supplier together with service providers.
LDaily: Will 5G be more expensive for Ukrainian subscribers?
Y. Nitsak: Additional services will cost as much as subscribers are ready to pay. Besides that, the 5G adoption will depend on the availability of subscriber terminals. For example, in Switzerland, Ericsson and Swisscom – a mobile service provider – launched the 5G technology a couple of weeks ago, which is only available on one type of smartphone. The speed for data transfer essentially differs from the one of 4G technology, however, this is not a revolutionary change. This is rather an evolution. That is why it is very important for us to go through all levels of 4G evolution before our market is ready for the fifth generation.
LDaily: Can you name the companies you are cooperating with?
Y. Nitsak: First of all, we cooperate with mobile service providers – these are our main partners and customers, jointly we develop new services and build networks of the third, fourth and fifth generation. In Ukraine, these are three major operators. In other countries, our main partners are also major mobile service providers. We also work with the representatives of the entire telecom ecosystem. These are both the producers of smartphones and chipsets – all the industry sectors to enable the subscriber get the service .
LDaily: How does the mobile communication quality in our country differ from the average Europian criteria?
Y. Nitsak: Based on my experience, in big cities with 4G coverage the quality will not differ from European one. When we assert that European coverage and penetration of 4G is better than ours – that is because they have low frequencies of 700-900 MHz available. Our operators do not have these frequencies available for 4G yet. The difference is in the coverage only. If we compare places with mobile broadband coverage, I would say we have a very good communication quality.
LDaily: What is the real percentage of smartphones’ penetration in Ukraine?
Y. Nitsak: According to our research, the smartphone penetration percentage is growing very dynamically. If 2-3 years ago it was about 25-30%, it is over 40% now. Once again, each operator has its own smartphone penetration rate. We observe a positive dynamics – almost all new terminals are smartphones because subscribers respond to new services provided by operators. Earlier as there was no mobile Internet, except for Wi-Fi, we could live without smartphones. Nowadays, 4G urges subscribers to switch to more modern terminals.
LDaily: Can you name the consumer trends 2019?
Y. Nitsak: The main consumer trend in Ukraine and in the world is the increase in video consumption. The video traffic is growing now and has already achieved a level of 40% out of the total mobile traffic. According to our forecasts, it can reach 60% of all Internet consumption. This is the trend where it is hard to step short. The video consumption will be definitely increasing.
LDaily: Which innovations can Ericsson in Ukraine be proud of?
Y. Nitsak: We can be proud of our global achievements which we take advantage of in Ukraine as well. Ericsson is a global company and our subsidiary in Ukraine is a part of the Big Ericsson. Our major achievement is commercial 5G agreements. We have already signed 18 agreements with mobile service providers all over the world. We have also signed about 40 memorandums and conducted approximately 80 pilots of 5G networks. If we talk about Ukraine, we are proud to work with all operators. About 50% of all mobile calls go through the Ericsson equipment. We are also one of the countries where Ericsson opened R&D centre – one of 34 in the world.
LDaily: How many people work for your company and how do you motivate the staff?
Y. Nitsak: At the moment we have about 350 employees. The main motivation factors are as follows: Ericsson is an international company, we work in a very open-minded environment, our employees feel exposed to all opportunities and scales of the global corporation. Over 95 000 people work for Ericsson. We have offices in 180 countries, contracts and partnerships all over the world, except for North Korea. This does motivate people being part of an innovative and hightech corporation. We pay all taxes, comply with all requirements of the local legislation, offer our employees additional benefits. We manage to attract and retain the strongest and the brightest talents on the market.
LDaily: How easy is it to do business in Ukraine?
Y. Nitsak: We are a large company and taxpayer, we have a certain value. One thing that we have been here since 1995, testifies that it its possible and necessary to do business in Ukraine. I do not say that there are no difficulties at all, however there are no difficulties, which we cannot overcome.
LDaily: You are also the Head of offices of Georgia and Armenia. What is the difference in doing business here and there?
Y. Nitsak: Everything is almost the same – I would not say that we have differences. Of course, Ukraine is bigger in size, so the volumes are bigger. We have an opportunity to hold more staff and be a certain hub of resources and talents. We do not see any significant regulatory or legislative differences.
LDaily: Which markets are a priority for Ericsson?
Y. Nitsak: Ukraine is one of the prioritized markets definetely, and is one of the countries with established R&D center which proves that Ukraine is very important as a market and location. By business volume I would not say that we are among the leaders, however, we are far from lagging behind.
LDaily: Will Ericsson expand in Ukraine?
Y. Nitsak: The decision about the expansion is made on the headquarters level. Our task is to provide objective information about the market. So, such decisions will depend on both internal factors (maintaining the financial situation and expanding plans for development in Eastern Europe), and external (geopolitical and macro-financial situation in the country).
LDaily: What directions do you plan to develop? Where are you going to invest into in the nearest future?
Y. Nitsak: In Ukraine, our main priority is to help operators to deploy 4G networks, this way help more subscribers, no matter where they live, have access to the technology, so we could forget such a phenomenon as ‘digital gap’. Globally, we focus on 5G, where it can be applied, where it is relevant. Obviously, once the market is ready, the 5G technology will come to Ukraine as well. One of the directions we are now looking closely at is Enterprise LTE/Private LTE. There are scenarios when you can build an LTE/4G network for large enterprises to provide LTE/4G coverage somewhere in a quarry, in a mine or at a large factory for industrial purposes – starting with remote access to the equipment and ending up with the Internet access for those who work at this enterprise.
Please read: Doing business in Ukraine during the period of political instability: what to focus on
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