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Real salary grows 0.9% MoM, Unemployment drops
Nominal salary totaled USD 355 (UAH 1774) in May. In UAH, salaries grew 2.2% MoM and in USD, their monthly growth reached 3.6% since the National Bank appreciated the hryvnya last month. Considering a 1.3% monthly inflation in May, the real salary improved by 0.9% MoM. The nominal growth dipped from 4.4% MoM in April, as did CPI growth. As for the year-long period, the nominal monthly salary grew 39.0% YoY and the real monthly salary improved by 12.8% YoY and by 12.1% YoY in 5M08 on average.
Also, official statistics on unemployment in 1Q08 were released. The real unemployment rate in 1Q08 dropped by 0.3p.p. to 7.1%, whereas in 1Q07 it was 7.4%. Notably, the average unemployment rate for the year in 2007 was 6.4%.
Our view:
The positive notice is the recovery of real salary growth. Although nominal salary growth decreased, the monthly CPI has fallen as well, which is a sign that the economy is returning to normal. Notably, unemployment is shrinking, signifying the sound state of the Ukrainian economy and the increasing bargaining power of employees with respect to salaries. By the end of the year the nominal monthly salary may well reach USD 400 and the yearly unemployment rate may decrease to 6.3%.
Ukraine increasing rates for agro-land leasing: NEUTRAL
The Ukrainian Land Committee wants to increase lease rates for agricultural land from the current 1.5-2% to 6% of the land assessment in money terms, announced Mr. Voyevodin, the Head of the Land Committee. The Committee will initiate new amendments to the Land Lease Bill, in order to increase land lease rates. The Land Committee is considering the possibility of re-allocating the purposes of land use without lifting restrictions on the sale of land.
According to the Ukrainian Land Committee, 6.9 mln people (90% of whom have special government permission) lease 27 mln ha of land in Ukraine. There are 60 mln ha of land in Ukraine, including 41.8 mln ha of agricultural land and 33 mln ha of arable land.
Our view:
Agricultural land in Ukraine is not a tradable asset, thus entities can merely lease it. We expect that Ukrainian authorities will lift the moratorium on the sale of agricultural land in 2009 after updating its Land Law and adopting a unified land cadastre. Current leasing costs are relatively low, ranging between USD 30 and 50 per ha. In our view, the implementation of a new Land Bill in Ukraine is inevitable. Once restrictions on the sale of land are lifted, land prices would amount to between USD 500 and 1000 per ha. We expect land prices in Ukraine to be appreciated at a higher level after the trade of land is established Prices for land in neighboring Russia have reached USD 1.6 thsd per ha, but are still significantly lower than the Western European average of USD 28 thsd per ha and in our view, will have potential for growth.
Sokrat: UTEL increased mobile users by 21.34% in 5M08: POSITIVE
According to the market research agency IKS-Consulting, Ukrtelecom [UTEL UZ, U/R] increased its mobile users by 21.34% in 5M08. Utel is a wireless operator that provides customer mobile services in 3G standard. As of November 2007, Utel’s subscriber pool grew to 19.9 thsd users Today subscriber growth is stable, as it has been in the previous few months, which has supported an effective marketing program by Utel.
Our view:
We think that this news is Positive for Ukrtelecom. This number is in line with our estimates of subscriber growth. A strong marketing program by Utel which has supported user growth, will allow UTEL to increase its subscriber pool to 40-50 thsd users by the end of 2008. We think that more and more 2G customers and especially business users from the main players on the Ukrainian market (MTS and Kyivstar) will start actively switching to UTEL service in near future. However, Utel’s subscriber pool is still small compared to its major competitors. We also think that UTEL, which owns a 3G license for mobile service, is a very attractive asset for the potential winner of Ukrtelecom’s privatization in the future. A combination of licenses for different fixed and mobile services and financial resources will be key drivers for Ukrtelecom’s grow after the end of the privatization process.
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