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. Last Updated: 07/27/2016

Abandoned Cellular Deal Hurts Kiev

KIEV -- The decision by U.S. electronics giant Motorola to abandon an ambitious cellular phone venture in Ukraine after a series of clashes with the government casts a pall over Kiev's hopes of attracting major foreign investment.

"Motorola cannot continue to invest in Ukraine when the government is constantly changing the rules of the game," said Victoria Bondar, Motorola's public relations director in Kiev.

Motorola had already injected $2 million into the venture and was preparing to put $500 million more into a 10-year project to set up Ukraine's first national cellular phone network.

The amount would have been the biggest foreign investment in Ukraine to date. But after two years of wrangling with the Ukrainian authorities, Motorola last week announced its decision to pull out.

After an international tender, Kiev had selected the Motorola project last March along with two others by two Ukrainian firms: Ukrainian Mobile Communications and Kievstar.

Motorola had already criticized Kiev for holding the tender, arguing that Ukraine had already given the rights to exploit the GSM-900 frequencies to Motorola under a license issued in 1995 to Motorola's Ukrainian partner, URS.

Motorola also complained that Ukrainian officials ignored the firm's advice about technological limitations and sharply hiked the fees required for a license.

The two firms still in the running to develop the cellular network represent, officially or semi-officially, the interests of the Ukrainian government, specialists say. Kiev owns 51 percent of UMC and Prime Minister Pavlo Lazarenko is believed to have a large stake in Kievstar.