Intertelekom Expands in Ukraine |
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A small telecommunications operator headed by a former top official from a neighboring pariah state is intent on expanding its operations in Ukraine. And although it has had its expansion blocked by the authorities in Ukraine and Moldova, Intertelekom, which hails from what is widely referred to as the black hole of Europe, has been successful in signing up some influential local and international customers. Boris Akulov, 52, used to be the minister of information and communications of Transdnistria, an unrecognized republic located between Ukraine and Moldova that has been accused for years by Western governments of gun-running and smuggling. Now he is the CEO of Intertelekom, a company that boasts 30,000 subscribers to its third-generation, wireless telephony services in Odessa Region. One such subscriber to Intertelekom is the European Union Border Assistance Mission to Moldova and Ukraine, which was set up in 2005 to help Kyiv and Chisinau curb smuggling through Transdnistria. In an exclusive interview to the Post, Akulov said that Intertelekom was founded at the initiative of the ministry he headed at the time. It launched its operations in Odessa in 2001. According to Akulov, Intertelekom is owned by Ukrainian citizen Viktor Gusan and Russian citizen Ilya Kazmaly, the owners and top executives of a Transdnistrian-based holding called Sheriff, which encompasses a wide range of business activities in the unrecognized state. The Bucharest-based Romanian Center for Investigative Journalism reported on July 19 that ?almost nothing moves in Transdnistria without Sheriff, both legal and illegal activities, as it is a structure that almost completely ?controls the local economy, producing benefits for private individuals using official support. As the Transdnistrian information and communications minister, Akulov had also been behind the idea to establish in 1998 a telecommunications company in Transdnistria called Interdnestrkom, which would eliminate the secessionist region??s dependence on Moldova for telecommunications services. The authorities in Transdnistria??s capital of Tiraspol have been in a cold war with Moldova??s recognized government in Chisinau since the country??s civil war in the early 1990??s. Akulov said that he chose to work with the CDMA (Code Division Multiple Access) standard of wireless communications because such a network was cheaper and faster to build, despite being a novelty at the time. The first CDMA network was launched in Hong Kong in 1995. CDMA provides high quality transmission but fewer services than the GSM standard used by Ukraine??s mainline mobile communications operators. Akulov, who claims citizenship in both Russia and Transdnistria, admitted that he couldn??t run Transdnistrian-based Interdnestrkom, since he was a state employee in charge of ideological and information wars with Moldova. Instead, he used the secessionist sliver of territory on Ukraine??s southwestern border, which has a population of around 300,000, to test out the new CDMA technology with an eye to launching a business in Ukraine. He said that establishing a company in Ukraine was the next logical step, since the Moldovan authorities categorically refused to allow Interdnestrkom to expand operations into Moldova. According to Akulov, relations between Chisinau and Tiraspol were at one point so bad that Moldovan telecommunications companies and Interdnestrkom resorted to trying to damage each other??s equipment using signals. ?It was a constantly extreme situation ?? a constant war, whether real, electronic or ideological, he said. Finally, in 2002, Akulov quit his government job to fully devote himself to Intertelekom??s operations in Odessa. As Akulov said curtly, ?We started there, because it is almost a home region for us. Transdnistria borders Ukraine??s Odessa Region. Regarding the investments that Sheriff owners Gusan and Kazmaly made into Intertelekom, Akulov said it was operational efficiency that mattered, not the size of the investment. According to the former unrecognized minister, the strategy used to develop Intertelekom in Odessa Region was similar to the one implemented in Transdnistria. ?We take a given region and try to cover it completely. He said that Odessa was the only Ukrainian Region for which Intertelekom received a license to operate back in 2001, adding that the company had been ?harshly refused, by Ukraine??s Telecommunications Commission when it applied to operate in Mykolayiv and Kherson regions, located to the east of Odessa. So Intertelelom decided to take full advantage of its possibilities in Odessa, which boasts a population of 2.4 million. ?I won??t say that we now cover 100 percent of Odessa Region, but we are almost there. In some areas, we are the only company providing coverage. Akulov said that although Odessa is less politically charged than Transdnistria, the local bureaucracy presents other challenges. To grow, Intertelekom relied on nostalgic, Soviet-era advertising images and attracted a number of high-level government clients, who according to Akulov include: the Odessa Regional state administration, its police, the road patrol, security service, tax administration, prosecutor??s office and the border guards. Akulov said that his company??s lower connection fees won over the local authorities, who in turn have been helpful to the company in other ways. Another subscriber of Akulov??s company is the European Union Border Assistance Mission to Moldova and Ukraine, which is tasked with advising and assisting Moldovan and Ukrainian border guards and customs officials on managing border problems like smuggling from Transdnistria. Rosemary Thomas, a spokesperson for the Border Assistance Mission??s press office in Odessa, said the decision to subscribe to Intertelekom was based on necessity. ?During the establishment of our first five field offices last December, it proved impossible to install landlines in two of them. Mobile phone coverage was also patchy in the location of the two offices. Hence we choose a solution which is a radio-wireless system which was offered only by Inter-telecom. Hence our decision to undertake a contract with the local branch of Intertelecom, which is based in Odessa. It is a legally recognized economic entity in Ukraine operating in conformity with Ukrainian law, she told the Post. Vsevolod Volovyk, marketing director of ITC, a Kyiv-based CDMA operator, said that when his company enters a new region, it also tries to attract important corporate clients, and regional state agencies are at the top of its list. Akulov said that Intertelekom had sold all 30,000 direct numbers that it had permission to sell in the city of Odessa and has begun connecting an additional 63,000 numbers in the region, with the eventual goal of selling CDMA phones with direct numbers in most of the region??s smaller towns and villages. He said that on average, Intertelekom??s subscribers pay $25 a month. The company has recently obtained a mobile CDMA license and the right to work in several other Ukrainian regions. However, without permission from Ukrtelecom, the country??s state-owned fixed-line monopoly, national expansion is severely limited. ?At the moment, we keep expanding our network in the regions where we have gotten licenses, regardless of problems with Ukrtelecom, said Akulov. Anatoliy Rusinskiy, Ukrtelekom's acting board chairman, told the Post Aug. 16 that the networks built by Intertelekom do not correspond to existing standards. As a result, he said, Ukrtelekom "has temporarily refused to connect the operator to its network in Ukraine." Rusinskiy also said that Ukrtelekom has sent a request to the country??s Telecommunications Commission for further clarification on how to proceed. ITC??s Volovyk, however, said that he found Intertelekom??s difficulties in getting connected surprising, given the fact that ITC has never experienced similar problems in any of the 21 regions where the company has a license to operate. Volovyk said that Intertelekom??s current strategy of receiving licenses and hurrying to build its network, whether it is connected to Ukrtelecom or not, may be a way of increasing the company??s liquidity before a possible sale. ?It just looks too much like what [GSM operator] Wellcom was doing prior to being bought by [Russia??s] Beeline, he said. Ukraine??s two leading mobile communications operators are UMC and Kyivstar, both foreign owned. www.kyivpost.com
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