Ukrainian mobile operators losses due to the pandemic – how will this affect prices in 2021?

Ukrainian mobile operators losses due to the pandemic – how will this affect prices in 2021?

During the 2020 pandemic, mobile operators around the world suffered huge losses due to lost profits. The main reason for this is the number of travels between countries has dropped significantly. This means the majority of Ukrainian mobile operators have lost a portion of their income, which was planning to receive it through roaming or the currency came from tourists and workers from other countries.

Ukrainian operators losses in 2020

One of the largest Ukrainian telecommunications companies, the Kyivstar, has calculated the Ukrainian cellular market has lost three billion hryvnia due to total quarantines around the world. There is the biggest losses are due to the lack of foreign exchange earnings from roaming. Its represent is 3.2% of the total operators’ total profit. Experts of “Vodafone Ukraine” have calculated their own lost profit from roaming at the level of 60%. The among amount is about one billion hryvnia.

Usually Ukrainians go on vacation from April to August, and it is the highest income from roaming during this period. However, in 2020, these months were totally quarantined around the world. Already in the spring it was quite difficult to go to Europe or at least somewhere on vacation. This is a plus for Ukraine, because the number of tourists inside the country has increased. It made possible to strengthen the hryvnia.

Why are operators raising tariffs?

At the end of 2020, the largest mobile operators announced tariff increases for next year. Journalists speculate this is due to operators planning to transfer their debts to consumers. The largest cellular operators Vodafone, Kyivstar and Lifecell reported the increase in tariffs is not connected with a loss of income, but with an increase in subscriber traffic and a significant amount of funds spent on investments in the creation of new 4G points. Experts note tariffs in Ukraine will increase by 15-20 percent annually.

Of course, this does not apply to all tariff plans. To understand how the cost of mobile services is growing, you need to calculate the ARPU indicator. It ir about how much the operator receives on average per subscriber.

For example, this indicator was at the level of 78 hryvnias in the Kyivstar in the third quarter of last year. Compared to the same period in 2019, the ARPU increased by 14.5%. Experts are confident the main reason for the growth of this indicator lies precisely in the billions in investments of companies in the development of new 4G towers throughout the country. Every Ukrainian has access to high-quality Internet. Interestingly, the profitability of mobile operators in Poland is 4 times higher. They have about the same population, and the territory is half as small. It saves money on mobile towers.