Kyivstar's rates are set to increase by 25%, leading to price hikes across all operators. Here's the reason behind this change.

The largest mobile operator in Ukraine, "Kyivstar", will significantly increase communication prices starting December 20 by raising rates substantially. The tariffs will rise by an average of 25%, which is a noticeable change for users. This increase has sparked a wave of outrage on social media.

The bad news: the increase is inevitable and will affect all operators to some extent (for several reasons, which will be discussed later); "Kyivstar" is simply the first to implement it. The good news: Ukrainians will continue to have access to communication, which is crucial for many aspects of life.

Kyivstar - the first. Who's next?

Recently, lifecell informed Forbes that they do not plan to raise tariffs for now. Vodafone Ukraine is currently reviewing its tariff lineup, but they did not specify the percentage of any increases.

Digital technology expert eQualitie Oleksandr Hlushchenko noted to "Telegraph" that tariffs will inevitably rise for all mobile operators. This will happen gradually due to several reasons and recent changes in Ukraine.

"They will all raise prices, but they are not doing it synchronously. If it were synchronous, it would resemble a cartel agreement, raising questions from the Antimonopoly Committee. Secondly, they all operate within market relations and each has additional fixed-line operators (landline internet, — Ed.), mobile communication, internet, and television. They compete with each other in these services.", Glushchenko explains.

It is logical that each operator is taking a pause to potentially attract dissatisfied customers through the MNP service (Mobile Number Portability — switching from one operator to another while retaining the number), not just in high-speed home internet, but also in packages for mobile numbers and subscribers.

"Economic laws and physical laws cannot be deceived. The only thing is that each operator has its own strategy, specific financial indicators, and plans, so they are delaying this process, but they will all raise prices.", Glushchenko states.

How communication prices have risen

Oleksandr Hlushchenko notes that prices have increased one and a half to two times when comparing tariffs from February 1, 2002, to December 1, 2024. However, this is only in relation to the hryvnia.

"If we take it in terms of conditional units, then tariffs in conditional units have either equalized as of February 1, 2022, or have become slightly higher.", Hlushchenko points out.

Blackouts, taxes, frequencies, and expensive equipment: why tariffs are rising

Previously, "Kyivstar" explained its new 25% increase by striving to provide quality communication. The tariff calculation took into account the increase in service consumption, as well as the fact that the prices of some tariffs had remained unchanged for an extended period.

Oleksandr Hlushchenko emphasized that inflation and rising tax levels are influencing the cost of mobile communication:

"In our country, there is inflation and tax obligations for businesses have increased. Of course, tariffs will rise. Business is not about philanthropy; it’s about making money.", Hlushchenko explains.

A few weeks ago, there was an auction for licenses to use frequencies in the 2100, 2300, and 2600 MHz bands. In total, operators paid 2.89 billion UAH for this. These expenses are passed on to the end consumer, Hlushchenko emphasizes.

The price of a tariff plan is also influenced by a decision from the National Center for Operational and Technical Management of Telecommunications Networks (NCU). Operators are required to ensure 10 hours of network operation in the event of outages by February 1, 2025. To achieve this, they must reserve base stations and become energy-independent, ensuring continuous operation without disconnecting communication. This also requires investment.

"Simultaneously, expenses for various operational costs are increasing. Logistics have become more expensive, fuel costs have risen, and there is destroyed infrastructure that needs to be restored. All these factors impose additional costs on communication operators, leading them to raise prices. This is necessary to ensure that communication is at least no worse than it was on February 1, 2022.", Hlushchenko concluded.

Compared to Europe, Ukrainians pay little

"Telegraph" asked Oleksandr Hlushchenko whether it can be said that Ukrainians pay little for communication compared to the rest of the world.

"There are correct comparisons and incorrect comparisons. Subscribers usually compare against the average salary in each country. However, it is necessary to compare against the expenses of mobile operators for network development and maintenance.", Hlushchenko states.

Since equipment and software are sold by suppliers at the same price in every country.

"It cannot be that a switch costs £1,000 in Britain and 500 in Ukraine. The expense part for equipment of our operators is similar to that of foreign operators. In our country, the cost of communication is among the lowest compared to neighbors, both mobile and broadband.", Hlushchenko adds.

Internet during blackouts

During power outages, there are many complaints from users about why they should pay if the internet is gone. However, it is essential to understand that if subscribers do not pay for communication, it will cease to exist. That’s the simple formula, Hlushchenko emphasizes.

"Payment for communication is necessary. In a competitive environment, there is always the possibility to switch to a provider that offers cheaper or better services according to the subscriber’s perspective,”, Hlushchenko remarks.

Fixed-line operators are a lifeline for subscribers during power outages. When the power goes out, the base station experiences a very high number of connections, similar to a DDoS attack.

"If there were, say, 500 devices connected, and then the power is cut, it jumps to 5,000 in seconds. Of course, laws of physics cannot be deceived, so the resources of the base station are shared proportionally among the connected devices. To prevent this, subscribers should choose fixed-line operators that have reserved energy and equipment or fiber optics. This way, those who are less fortunate can still access mobile internet. However, in practice, this does not work because most people do not have reserved energy; when my router is the only one left operational, all their devices are connected to mobile operators’ networks," Hlushchenko explains.

Poor connection is caused by users overwhelming the base station.

Focus on actual expenses rather than tariffs

Telecommunications market expert Roman Khimich told "Telegraph" that first and foremost, attention should be paid not to mobile communication prices, but to analyzing actual expenses of subscribers, ARPU (Average Revenue Per User).

Mobile operators employ various marketing techniques that can create a misleading perception of the actual cost of services. Therefore, the focus should be on evaluating the real costs incurred by users rather than just nominal tariffs.

According to Khimich, Ukrainian spending on mobile communication is steadily increasing for several key reasons:

1. Dependence on imports. A large portion of the equipment and services used by operators is imported, so the devaluation of the national currency directly affects their cost.

2. Insufficient investment in infrastructure. Ukrainian mobile networks are much less invested compared to neighboring countries. Geographically, Ukraine is the largest country in Europe, which requires substantial costs for building and maintaining networks.

The war has introduced new challenges:

• Restoration of damaged infrastructure. Networks require constant investments for repairs, adaptation to power supply interruptions, and other wartime challenges.
• Subscriber churn. Operational costs depend on the technical capacity of the network, not the actual number of users. Those subscribers who remain must pay for those who have left.

Previously, "Telegraph" reported that mobile communication in Ukraine is significantly becoming more expensive. Tariffs for communication services from all mobile operators will rise by approximately 50%.