The owner of “Kyivstar” has warned of new risks for businesses in Ukraine

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Holding VEON, who owns the Russian VimpelCom and Ukrainian Kyivstar, warned investors on the risks for business in Ukraine, whose authorities intend to oblige the operators to carry out identification of all subscribers

A possible reduction in the number of subscribers in Ukraine, said the list of risks for business, enjoyed an international holding company VEON (until recently VimpelCom Ltd.) the Commission on securities and stock exchanges of the USA. This scenario is possible because the present Ukrainian law “On electronic communications”, according to which operators will need to obtain or confirm passport data of all owners of the SIM cards.

On December 31, 2016, the operator was serving in the Ukraine 26.1 million subscribers, or 12.5% of the total customer base of all companies VEON. Revenues of Kyivstar for the year 2016 totaled $586 million, or 6.6% of total revenue VEON. According to AC&M, just at the end of 2016 in Ukraine was 58.2 million active mobile subscribers. The major players were, “Kyivstar” (45%), “MTS-Ukraine” (36%) and Astelit (brand Life:) — 16%).

The procedure of identifying the subscribers by the authorities VEON previously conducted in Pakistan. According to the report, the decision was taken by the government because of the increased terrorist threat. The operators were asked to give it 11 months, but authorities have given only 90 days to recheck more than 100 million subscribers. At the end of this period was blocked for about 25 million of unidentified SIM cards. “Daughter” VEON in Pakistan was verified by 38 million SIM cards, the identity of the owners of 13% could not be confirmed, and they were turned off, the document says.

In December 2015 such demands presented to the authorities of Bangladesh. Operators were required to tie each SIM card in the national database to a specific ID. To confirm the identity from the owners of the SIM cards fingerprinted. It has been reported that 130 million active SIM cards by April 2016 have been confirmed identity of more than 80 million owners. “Daughter” VEON had to block the 3.8 million SIM cards (at the end of 2015 in the country she had 32.3 million subscribers). “Similar actions have recently been announced in Algeria (in this country also has “daughter” VEON. — RBC), and we expect similar actions in the Ukraine in 2017,” the report says VEON.

According to holding, the negative impact of the “cleaning” of subscriber base in Pakistan and in Bangladesh on the performance of the company did not have. Revenue in Pakistan at the end of 2016, totaled $1.45 billion versus $1,014 billion a year earlier, in Bangladesh $621 million versus $604 million

“Such requirements can lead to loss of customers and lawsuits from those who may be blocked by mistake, penalties, suspension of license and other consequences of non-compliance with rules,” warns investors VEON. To some extent it may adversely affect the business, financial condition, results and prospects of the company. VEON indicates that the Ukrainian initiative will lead to higher costs for all operators. Compliance with the requirements of the law, as passed earlier portal will cost Kyivstar 260 million (538 million rubles at the current exchange rate).

Representative VEON did not answer the question RBC, do in the company of difficulties with the registration of subscribers in Luhansk and Donetsk regions. In the MTS (at the end of 2016 its daughter served in Ukraine 20.8 million subscribers under the brand name Vodafone) did not answer the questions of RBC.

In addition, the risk to the business sponsors list continues to call the situation in Russia and Ukraine, as well as the possible actions in this regard from the United States, the European Union and some other countries. In addition, the report recalled that since September of 2014 in Ukraine the law allows you to revoke the license for telecommunications services from companies or individuals under sanctions. “There can be no assurance that the escalation of the current situation will not lead to cancellation, suspension or other action in respect of some or all of our Ukrainian telecommunications licenses or other sanctions, which could have a material adverse effect on our business,” — said in the report VEON.

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