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. Last Updated: 07/27/2016

Ukrainian Telephone Hires Lucent, MKM to Modernize

KIEV -- Ukraine's state telephone company Ukrtelekom and private operator Utel have each signed separate 10-year contracts with both Lucent Technologies and MKM Telekoms to supply and install switching networks, company officials said Friday.


South Korea's Daewoo and France's Alcatel CIT, a unit of Alcatel Alsthom, are expected to sign similar contracts with the two Ukrainian companies shortly, company spokesmen said.


"To be selected for the next 10 years in a country like Ukraine means serious business," said Gerard de Koning, managing director of Lucent Technologies, equipment supply division of AT&T.


"We hope that it will develop into a business of $100 million to 200 million per year in magnitude," he added.


Interfax Ukraine reported the deal is worth $20 billion. It is part of government plans to upgrade Ukraine's Soviet-era telephone system by the year 2005.


De Koning said Lucent has formed a joint-venture company, AT&T Chezara Ltd. -- owned 40 percent by Ukrainian companies and 60 percent by AT&T -- to manufacture and install electronic switching systems.


MKM Telekoms, owned by Ukraine's P.O. Korolyov company, Russia's Institute ZNIIS and Siemens AG, signed with Utel earlier this week and with Ukrtelekom in July.


Utel is owned 51 percent by 14 state-owned Ukrainian telecommunications companies, 19.5 percent by AT&T, 19.5 percent by Deutsche Telekom AG and 10 percent by Koninklijke PTT Nederland NV.


The next step for Lucent and MKM will be to obtain project orders from local telephone service suppliers and begin manufacturing, the officials said.


Koning said the contracts' financing will be assured by Dutch banks and the Dutch government. "The end result is that Utel and Ukrtelekom can purchase the equipment and pay it back later."