Golden Telecom Business Solutions (GTBS) has declared the World Wide Web and data services top priorities with the acquisition of a major Ukrainian Internet provider last month, a deal that gives Ukraine its first nationwide digital telecommunications network offering integrated voice and data services.
GTBS, the business telecommunications division of Golden Telecom LLC, in February increased its share from 49 percent to 99 percent in Sovam Teleport Kyiv, Ukraine's largest data and Internet service provider.
Although neither side is willing to divulge the financial details, the merger is the logical outcome of the hopes of Golden Telecom Inc., GTBS's parent company, to become the CIS' biggest Internet firm.
Although GTBS previously offered Internet services to its clients, with the acquisition of Sovam that area of its business will step to the fore.
On the strength of its fiber optic cable network – the largest in Kyiv – GTBS already offers Kyiv-based businesses digital telephone, ISDN and data services. Adding Sovam, whose network covers most major Ukrainian cities, will allow GTBS to extend its data services and to expand its network into all of Ukraine's 26 oblasts, GTBS general manager Ashley Reid said.
'The networks and businesses of the two companies complement each other perfectly,' Reid told the Post.
After entering the market in 1991, Sovam grew into one of Ukraine's largest internet and data service providers. It was among the first companies to offer e-mail and electronic banking and data services in independent Ukraine.
According to Sovam General Director Oleksandr Khaletsky, capital from the Golden Telecom group will go towards expanding and improving Sovam's network infrastructure to allow a wider range of services.
Reid declined to comment on the size of GTBS' planned investment, calling it 'significant.'
Reid said that GTBS' plans to shift its focus toward the internet will not be deterred by the low numbers of Ukrainians online – variously estimated at 100,000 to 500,000 people, or 1 percent to 5 percent of the population.
'At the moment the market may be very small,' he said. 'But in the longer run, we view the internet as an important growth area.'
He said the GTBS/Sovam merger would boost competition and increase quality in the internet service provider network.
'When [Golden Telecom] first came here, there was only one mobile phone provider here and very few people using cellular phones,' he said. 'We addressed pricing and quality and the market grew. The same is going to happen with Internet.'
GTBS's sister company, Golden Telecom GSM, in 1996 became Ukraine's second mobile phone provider. Others have since followed, and the number of mobile phone users has grown dramatically as prices have plunged and range of services on offer has widened. GTBS has invested over $20 million in Ukraine to date.
