Kyivstar's rates are increasing by 25%. Prices will rise across all operators, and here's the reason behind it.

The largest mobile operator in Ukraine, "Kyivstar," will significantly increase communication prices starting December 20 by a substantial amount. Rates will rise by an average of 25%, which represents a noticeable difference 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 various reasons, which will be elaborated on later); "Kyivstar" is simply the first to implement it. The good news: Ukrainians will continue to stay connected, as many aspects of life currently depend on mobile communication.

"Kyivstar" – the first. Who's next?

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

Digital technology expert eQualitie Alexander Hlushchenko noted to "Telegraph" that rates will inevitably rise for all mobile operators. This will occur gradually and is explained by several factors and recent changes in Ukraine.

"All of them will raise prices, but they do not do it synchronously. If they were to do it synchronously, 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 for these services", — explains Hlushchenko.

It makes sense that each operator is taking a pause to, at the very least, use the MNP (Mobile Number Portability) service to try to attract dissatisfied customers, particularly in the realm of high-speed home internet and mobile subscriptions.

"The laws of economics and physics cannot be deceived. The only thing is that each operator has its own strategy, specific financial indicators, and plans, so they are postponing this process, but they will all increase prices", — says Hlushchenko.

How communication prices have risen

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

"If we consider it in relative units, then tariffs in relative units either leveled out by February 1, 2022, or increased slightly", — emphasizes Hlushchenko.

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

In "Kyivstar," they previously explained their new 25% increase as an effort to provide high-quality communication. When calculating tariffs, they considered the increase in service consumption, as well as the fact that some tariffs had remained unchanged for a long time.

Alexander Hlushchenko pointed out that inflation and rising tax levels are influencing the cost of mobile communication:

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

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 costs are passed on to the end consumer, Hlushchenko emphasizes.

The price of the tariff plan is also affected by a decision from the National Center for Operational and Technical Management of Telecommunications Networks (NCTM). Operators are required to ensure 10 hours of network operation in case of outages by February 1, 2025. To achieve this, they must reserve base stations and become energy-independent to maintain service. This also requires investment.

"At the same time, expenses for various operational costs are increasing. Logistics costs have risen, fuel costs have increased, and there is damaged infrastructure that needs to be restored. All of this imposes additional costs on communication operators, and they raise prices. So that communication is at least not worse than it was on February 1, 2022", — summarized Hlushchenko.

Compared to Europe, Ukrainians pay little

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

"There is a correct comparison, and there is an incorrect comparison. Subscribers typically compare against the average salary in each country. However, it should be compared relative to the expenses of mobile operators for network development and maintenance", — says Hlushchenko.

Since suppliers sell equipment and software at the same price in every country.

"It cannot be that a switch costs 1000 pounds in Britain and 500 in Ukraine. The cost of equipment for our operators is similar to that of foreign operators. In our country, mobile and broadband communication is among the cheapest compared to neighboring countries." – states Hlushchenko.

Internet during blackouts

When the power goes out, there are many complaints from users — questioning why they should pay if the internet disappears. However, it is important to understand that if subscribers do not pay for communication, it will not exist. That’s all; it’s a very simple formula, emphasizes Hlushchenko.

"Communication must be paid for. There is always the opportunity to switch to a provider that offers cheaper or higher-quality services, according to the subscriber's perspective," — states Hlushchenko.

For subscribers, fixed-line operators are a lifesaver during power outages. When the power is turned off, 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 goes out, it jumps to 5000 in a matter of seconds. Of course, the laws of physics cannot be deceived, so the resources of the base station are divided proportionally among the number of connected devices. To avoid this, subscribers should choose fixed-line operators that have reserved power and equipment, or optical networks, so that those who are less fortunate can still access mobile internet. But in practice, this doesn’t work because most people don’t have reserved power. If there is one router available, it belongs to me. Thus, all their devices are sitting on mobile operators' networks," — explains Hlushchenko.

Poor connection is due to users overloading the base station.

Focus on real expenses, not just rates

Telecommunications market expert Roman Khimich told "Telegraph" that the first thing to focus on is not the prices of mobile communication. It’s essential to analyze the real expenses of subscribers, ARPU (Average Revenue Per User).

Mobile operators employ various marketing tactics that can create a misleading impression of the actual cost of services. Therefore, the focus should be on examining users' actual spending rather than just nominal rates.

According to Khimich, Ukrainian spending on mobile communication is consistently rising 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 impacts their cost.

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

The war has created new challenges:

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

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