Kyivstar: Making Life Better by Providing Best Services

Kyivstar, founded in 1994, is the largest Ukrainian telecom operator providing communications and data services based on a broad range of mobile and fixed-line technologies including 3G. Kyivstar is a part of VimpelCom Ltd., one of the world’s largest integrated telecom companies, headquartered in Netherlands. Recently, ZTE Technologies interviewed Peter Chernyshov, CEO of Kyivstar. He talked about Kyivstar’s performance in 2016, 3G deployment and CSR initiatives. He also shared with us his thoughts on digital transformation, assessment on ZTE, and insights into the future global telecom market.

I believe that a real CEO should work in fast-moving consumer goods (FMCG) segment, in service company and in B2B sector. I had had more than 10 years of experience in utilities, electro-engineering and brewing industries before I decided to switch to telecom.

I started working in VimpelCom group on 13 May 2014 and since then it was clear that I did not understand anything in telecom. It was necessary for me to take a “basic training” in VimpelCom holding. I was offered to go to two countries: Bangladesh and Italy. I spent a week in Bangladesh and one and a half month in Italy. Republic of Bangladesh was chosen because it was a poor country (as Ukraine), and I had to get acquainted with peculiarities of the sales for very poor consumers. Italy took more time because there was Wind—the second company in the group by revenue. Wind is considered the best in Group in terms of operating business. After these trainings, I became the President of Kyivstar.

Who could imagine that in two years CK Hutchison and VimpelCom will create a strong new operator in Italy, merging Three Italy and Wind to drive competition in the market and serving over 31 million mobile customers and 2.7 million fixed line customers?

In 3Q 2016, the service revenue grew organically 9% YoY, primarily because of successful commercial activities and the strong growth of mobile data revenue of 62%. Underlying EBITDA organically increased 18% in Q3 2016. The EBITDA margin grew just in excess of 55%: driven by higher revenue and lower interconnect costs, partly offset by an increase in frequency fee, inflation on rent and utilities and a negative currency devaluation effect on OPEX denominated in foreign currency.

I believe that these results are good enough, but we have many things to do to keep the position of leader in Ukrainian telecom market. I hope that ZTE would continue supporting us on this way of transformation.

Kyivstar continues to roll out its 3G networks, reaching in November 2016 62% of population coverage, up from 35% at the end of 2015. Our 3G services are available in more than 4,000 cities and settlements. We started provision of mobile broadband in ATO zone (Donetsk and Lugansk region), being the first telecom operator who came there with 3G services.

Recently, we have successfully launched mobile broadband in Zaporizhzhia. We create equal opportunities for our subscribers and do our best to provide each Ukrainian with the possibility to enjoy full advantages of 3G internet connection. In partnership with ZTE, we have swapped almost 2,000 sites.

Ukrainians have begun to talk more and to use 3G services. In the third quarter of 2016, MoU increased to 544 minutes, and 3G data traffic in our network reached 9,111 TB. Mobile data revenue experienced strong increase primarily due to the popularity of data-oriented tariff plans targeted at smartphone users.

I would like to remind that Kyivstar was the first among telecom operators in Ukraine who could offer customers unlimited access to social networks, and the possibility to listen to music and watch videos online without any restrictions. As a result, in the third quarter of 2016, revenues from mobile data services grew to 61%.
 
How will Kyivstar react to the digital transformation that the global major operators are currently undertaking?

Actually, all VimpelCom Group is now in the process of digital transformation and Kyivstar is not an exception. We face not only challenges from telecom users, but also from technologies. The capacity of existing telecom systems does not meet the requirements of new technologies. That is why we use new approaches to our IT infrastructure, replacing 20% of existing systems in our project with Digital Stack. With this new Digital Stack, we will create simple and understandable products and services for customers, and the launch of new services will take hours, not days. We can also create such new solutions like mobile financial services and mobile payments.

We also learn how to work with big data using “customer service management system”. How does it work? For example, we get the signal that a user has topped up in a second after he did that. Our big data machine gathers all data about him and transfer them to Campaign Management solution, where a personal offer is created. The user gets that personal offer and feels the care of Kyivstar. These personal offers are very popular among our users.

We have created a digital woman—Zoryana, who is not only beautiful but also smart and speaks only when you ask her. The smart chat bot is created by natural language processing technologies. She knows more than 5,000 unique answers and is a part of more than 400,000 dialogs. Our customers love her—75% of them return to her and 70% give her positive feedback.

Kyivstar is really a social responsible company. Our corporate social responsibility stands for a business conducted in harmony with society, voluntary commitments of the company, and active participation in social and economic development of Ukraine.

Since 2015, Kyivstar has launched the global program “Make Your Mark”—a nationwide social and educational initiative implemented by the international group VimpelCom. The program is aimed to support talented pupils, IT students, startups and young entrepreneurs. It involves the support of the Ukraine students who show the best results in exact disciplines—natural sciences and technologies (including IT, engineering, robotics, and mathematics).

In 2015–2016, Kyivstar supported 25 academic competitions in Ukraine, including 6 international, as well as other educational initiatives in STEM disciplines involving more than 4,200 schoolchildren throughout Ukraine.

Kyivstar also organizes a series of meetings with opinion leaders in the field of economics and social sciences based on Kyivstar Business Hub. This project is aimed to develop the entrepreneurial spirit and technological skills of the youth to stimulate the creation and development of socially significant software products, which are based on mobile technologies. The total number of young entrepreneurs of these events has already reached more than 4,717.

In 2016, Kyivstar supported the launch of telecom accelerator VDNG-TECH. It is a unique case for Ukraine telecom market. We got 120 applications, and picked 11 teams that had a chance to study and work with our specialists. Kyivstar team spent lots of time helping startups improve their ideas and make them work. In October 2016, we picked 4 winners. Now we are in the process of commercial negotiations with them. In 2016, for the first time Ukraine took part in Eurasia Mobile Challenge. VimpelCom’s initiative aiming to unlock development opportunities for young people, irrespective of their technical skills, will help shape the future and drive economic growth in their country or region. Kyivstar also supported this initiative. 88 Ukrainian startups got the chance to win $20,000 to develop their products.

In what other areas ZTE could be contributed to the development of Kyivstar?

Are you satisfied with ZTE’s team? What is your outlook for future cooperation between Kyivstar and ZTE?

ZTE is a trusted partner already for the entire VimpelCom Group. The next step for ZTE is to increase its market share in the group and become a strategic partner.

We need high level of expertise on both commercial and technical fields, as well as business-oriented approaches, win-win partnership spirit and professionalism in all our activities.

What insights can you share about the future global telecom market?

It is useless to make prognoses. Technologies are changing every single moment, so it is impossible to predict how they will change. I can only tell you about changes that I expect to happen in Ukraine in the nearest future.

People will have a SIM card, for not only smartphone and tablet, but also a dozen of other IoT devices—smart home and wearable electronics. We will work in such a way that managing these devices would be as easy as today you manage your smartphones. People will use mobile internet as the main even at home, even on the computer. Mobile account will be used just like a bankcard—to pay for any goods and services both online and offline (MFS). We will be able to sign a document electronically using a mobile phone, and it will be valid (Mobile ID). Versatile SIM cards will be embedded in the devices, and they will be able to work with any telecom operator—to select and change the operator, you won’t need to change SIM card (eSIM). Management interfaces will become more similar to interactions in the real world: augmented and virtual reality and personal assistants will be allowed to more intuitively, fast and effectively solve problems. For now it is necessary to formulate a query in Google, to move to any site, to understand its navigation, to search for information, and to download and customize different applications.

The world is changing. Many of these changes revolve around the mobile operator. Data transfer and mobility of data sources play a huge role in these changes. One of the concepts is that the mobile operator will be the operator of the virtual reality. Yesterday, we passed through a network of voice, today we pass the 360 videos, and tomorrow is yet to pass sensations. The world is changing and we, as telecom operator, should be a part of this change, driving the innovation process.