Kyivstar: Digital Innovation, Resilient Connectivity

Kyivstar is Ukraine’s clear market leader in mobile and fixed-line connectivity, serving more than 22.5 million mobile customers and around 1.2 million broadband subscribers. It operates the country’s most extensive and reliable network, with near-universal population coverage and consistently high network quality. This scale provides Kyivstar with structural advantages that are difficult for competitors to replicate.

The company has demonstrated consistent pricing power even in a stressed economic environment. Mobile ARPU has grown at a double-digit rate, supported by disciplined repricing, higher data consumption, and migration to higher-value plans. At the same time, churn has fallen to historically low levels, highlighting customer stickiness and the importance of network reliability. For many users, Kyivstar is not simply a provider, but the default network.

Crucially, this telco platform generates strong and predictable cash flows. Kyivstar consistently converts a large share of EBITDA into free cash flow, allowing it to reinvest in the network, fund resilience initiatives, and support expansion, all the while maintaining a strong balance sheet with a significant net cash position. For investors, this core business provides downside protection and financial stability in an otherwise volatile geography.

With a dominant telco foundation in place, Kyivstar is expanding into digital services that sit naturally alongside connectivity. Rather than attempting a wholesale reinvention, the company is layering services onto existing customer relationships, billing infrastructure, and nationwide distribution. Key verticals include ride-hailing (Uklon), scaled digital healthcare platforms, entertainment (Kyivstar TV), and enterprise cloud, cybersecurity, and data services.

This strategy lowers execution risk. Kyivstar has already built trusted access to millions of users, enabling it to cross-sell digital services at relatively low customer acquisition cost. Healthcare is emerging as a daily-use category, increasing engagement and frequency of interaction. Customers who adopt more than one service tend to remain more loyal, as their lives become more embedded in the Kyivstar ecosystem.

Digital revenues are growing strongly, and the growth has been rapid and broad-based across verticals. Healthcare platforms add transaction-led revenue streams alongside subscription and advertising models. While these services typically carry lower margins than core telecom, they also require significantly less capital investment. Over time, this mix shift supports accelerated growth and cash generation while reducing reliance on pure connectivity pricing, creating a more diversified and durable earnings profile.

Kyivstar occupies a unique position in Ukraine’s economy. Beyond being the largest telecom operator, it functions as critical national infrastructure, supporting communication for households, businesses, and public institutions. Throughout the war, Kyivstar has kept networks operating under extreme conditions, while expanding essential digital services, reinforcing its role as a trusted national champion.

Looking ahead, the company is investing in initiatives that align commercial objectives with national priorities. These include improving energy resilience through renewable power generation, rolling out satellite-enabled Direct-to-Cell connectivity to ensure nationwide coverage, and scaling digital healthcare access through platforms such as Helsi and Tabletki.ua. Each initiative strengthens Kyivstar’s strategic relevance while opening longer-term growth opportunities.

As the only Ukrainian company listed on a US exchange, Kyivstar offers investors rare, direct exposure to Ukraine’s eventual reconstruction through a profitable, well-governed business. Healthcare digitisation is likely to be a core pillar of post-war rebuilding, alongside infrastructure and connectivity. While the timing of recovery is uncertain, Kyivstar is structurally positioned to benefit as infrastructure spending, digitalisation, and international capital flows accelerate.

• Monetisation of AI and enterprise digital services: Over time, Kyivstar can embed AI capabilities into enterprise cloud, cybersecurity, data analytics, and government-facing services. As Ukraine modernises public services and enterprises digitise further, these offerings could become meaningful, higher-margin revenue streams layered onto the existing business.

• Ukraine reconstruction and capital market normalisation: As Ukraine stabilises and reconstruction accelerates, Kyivstar stands to benefit from rising economic activity, infrastructure spending, and renewed foreign investment. Improved macro conditions and reduced geopolitical risk could also support a valuation re-rating as international investors reassess Ukraine exposure.

• Rising multiplay penetration across the customer base: As more customers combine connectivity with digital services such as healthcare, TV, and mobility, Kyivstar benefits from higher average spending and lower churn. The addition of Tabletki.ua materially expands healthcare touchpoints, allowing revenue growth to outpace subscriber growth without requiring proportional increases in capital investment.

• Selective bolt-on acquisitions in digital and infrastructure assets: Kyivstar has the balance sheet capacity to pursue targeted acquisitions that deepen its digital offering or strengthen network resilience. The Tabletki.ua transaction demonstrates disciplined M&A execution, while leveraging existing distribution, billing, and customer relationships.

• Monetisation of AI and enterprise digital services: Over time, Kyivstar can embed AI capabilities into enterprise cloud, cybersecurity, data analytics, and healthcare-adjacent services, including optimisation of digital pharmacies and patient pathways. As Ukraine modernises public services and enterprises digitise further, these offerings could become meaningful, higher-margin revenue streams layered onto the existing business.

• Ukraine reconstruction and capital market normalisation: As Ukraine stabilises and reconstruction accelerates, Kyivstar stands to benefit from rising economic activity, infrastructure spending, and demand for accessible digital healthcare. Improved macro conditions and reduced geopolitical risk could also support a valuation re-rating as international investors reassess Ukraine exposure.

Kyivstar operates entirely within Ukraine, making it directly exposed to the ongoing war and broader geopolitical uncertainty. Military escalation could damage physical infrastructure, disrupt operations in specific regions, or impair service continuity. Prolonged conflict may also weigh on consumer confidence and corporate spending, limiting near-term growth.

In addition, wartime conditions increase the risk of regulatory intervention, changes in taxation, or constraints on capital allocation. While Kyivstar has demonstrated resilience and adaptability, investors must recognise that operating conditions remain unpredictable and subject to sudden shifts driven by external events.

Maintaining network uptime in Ukraine requires sustained investment. Power outages and grid instability pose operational challenges that are far more severe than in most developed markets. Kyivstar has responded by investing heavily in generators, batteries, backup systems, and renewable energy sources, but these measures increase both capital and operating costs.

There is also execution risk associated with large-scale resilience projects. Delays, cost overruns, or equipment shortages could temporarily pressure margins or service quality. While these investments strengthen long-term reliability and trust, they may weigh on short-term financial performance.

Ukraine’s economy faces elevated inflation, constrained consumer purchasing power, and ongoing currency volatility. Although Kyivstar reports strong operating performance in local currency, fluctuations in the hryvnia can materially affect USD-reported revenues, earnings, and cash flows.

For international investors, this creates a potential disconnect between operational momentum and headline financial metrics. Even if the underlying business continues to perform well, FX movements may obscure progress or contribute to valuation volatility. Over time, macro stabilisation would help alleviate this risk, but it remains a key consideration in the near to medium term.