For most of the past two years, Ukraine’s telecommunications policy has been viewed through the lens of wartime resilience. Keeping networks operating amid missile attacks, restoring damaged infrastructure and ensuring continuity of government communications understandably took precedence over longer-term questions of industrial policy or supply chain security. That phase is coming to an end.
According to Ukrainian officials, the National Commission for the State Regulation of Electronic Communications (NCEC) is expected to announce its 5G spectrum auction shortly. The auction would be a commercial competition (rather than a beauty contest based on quality) that Ukraine has spent four years preparing, and would allocate scarce spectrum rights that will shape its critical communication infrastructure for decades after the war.
The auction also follows an increasingly extensive programme of 5G trials. What began as limited technical demonstrations has gradually expanded into operational pilot networks in Lviv, Borodyanka, Kharkiv, Kyiv and Odesa. However, the three 100 MHz blocks at 3.4–3.8 GHz that carry actual 5G capacity remain under this trial regime, and any outdoor use is confined to designated districts, where every base station is individually approved by the military’s frequency authority.
These trials are also expected to continue until the end of martial law, i.e. considerably longer than envisaged. The necessary amendments are already incorporated into Ukraine’s national frequency plan, allowing the operators to continue expanding and optimising their trial networks while the permanent licensing framework is still being developed.
As a result, more than 300 non-standalone 5G base stations, serving 1.5 million users to date, now operate as “trials” outside the normal framework. Vodafone sites run Huawei and, in Kyiv only, Nokia. Meanwhile, Kyivstar’s 200 pilot sites (the market leader, with a 47 per cent share and a Nasdaq listing through its parent) run almost exclusively on Huawei.
Similar developments are underway in the fixed-line market. Ukraine’s fixed network is among the most advanced in Europe, with nearly 93 per cent of its broadband delivered over fibre across some 4,100 decentralised ISPs. That market is now consolidating on Western capital, with Nokia in the access network and Cisco in the backbone – while a long tail of thousands of small providers continues to buy Huawei, ZTE and other Chinese brands.
Eventually, the Ukrainian fixed-line operators will have to comply with the EU’s proposed CSA2, which lists fibre access equipment as one of the key assets from which high-risk suppliers must be excluded. Here, too, networks and subscribers are being allocated faster than the rules, although the fixed market is quietly resolving its high-risk-vendor question through consolidation and European export credit.
Neither Toolboxes nor Carpenters
The overstretched Ukrainian government has yet to decide which institution should administer any future high-risk-vendor regime. A draft legislative package implementing a Ukrainian version of the 5G Toolbox has been prepared through amendments to both the Law on Electronic Communications (the counterpart to the EU Electronic Communications Code) and the Law on Cybersecurity (the NIS2 analogue), which, similar to the EU approach, would put vendor restrictions into the framework by binding operators via their licences.
The networks that kept Ukraine connected throughout the war largely run on equipment from vendors that the EU and many Member States classify as high-risk. The question is whether a candidate country can accede to the EU while continuing to work with such suppliers. Brussels has been pressing Ukraine to align with the EU’s 5G Cybersecurity Toolbox as part of the accession process, and the European Commission’s 2025 enlargement report explicitly criticised Ukraine for making only “limited progress” and recommended that Kyiv introduce provisions to exclude high-risk suppliers from future 5G spectrum awards – a decision that some of its Member States (including Germany) are yet to make fully.
The decision remains under review within NCEC and the State Service of Special Communications and Information Protection (SSSCIP) after much delay. While the spectrum auctions move ahead, inter-agency conflict between the two agencies is delaying the Cybersecurity Law that determines which vendors may participate. Thus, the draft has yet to reach the Cabinet of Ministers or the Rada, let alone be shared with Brussels and other donors.
The national regulator, NCEC, is committed to closer regulatory alignment with the Single Market and takes a relatively more restrictive view of Chinese suppliers than its sister agencies. However, it lacks the powers to execute what Brussels wants. The key word here is “relative” – the European Commission rebuked the NCEC for granting a licence to a high-risk supplier in the Lviv 5G pilot, “contradicting the spirit” of the Protocol of Intent on 5G Security. Even so, it has issued type approvals for ten Huawei base station models in April 2025.
Meanwhile, the security agency, SSSCIP, has the statutory mandate for the current prohibition lists, but expresses confidence in Huawei as a supplier of civilian networks. Huawei has also carefully crafted its argument that it has withdrawn from the Russian market and has paid a price for siding with Ukraine. Huawei has suspended new contracts with Russian operators and relocated senior management to Kazakhstan but has allegedly continued sales through grey imports outside its control.
The EU and its vendors naturally look at this relationship with suspicion. In October 2025, the Ukrainian anti-corruption prosecutor charged two SSSCIP officers over a procurement scheme that rigged tenders for drones and paid up to 90 per cent over market prices.
In contrast, fixed networks are unlikely to be caught by a similar institutional conflict, and neither regulator has suggested otherwise. NCEC decisions do not touch fixed access, as the fixed market is largely unlicensed. The SSSCIP’s prohibition list includes network hardware (such as routers, switches and VPN gateways), but every banned supplier is Russian. More importantly, the EU recommendation is confined to 5G auctions, and fixed equipment enters the picture only if the current CSA2 draft is adopted.
In sum, Ukraine follows a familiar German habit by allocating spectrum while leaving the rules on vendor eligibility unresolved.
Influence Without Leverage
The United States once financed nearly two-thirds of the digital ministry’s project portfolio. Before the USAID critical-infrastructure programme was frozen in January 2025 and the agency itself dissolved six months later, it had restored 11,000 kilometres of fibre that Russia’s strikes had damaged.
Meanwhile, Brussels continues to invest enormous political (and actual) capital in integrating Ukraine into the Single Market. Ukraine already participates in BEREC, has aligned large parts of its electronic communications framework with the EECC, and entered the EU’s roaming area with full internal market treatment, never before granted to a non-member.
However, the EU has remarkably little leverage over the commercial choices on Ukraine’s networks. The conditionality and disciplinary mechanisms within the Ukraine Facility are very real, and some €30 billion has hinged on reforms tracked quarterly across more than 150 indicators where an exclusion of Chinese vendors may have been an implicit objective – but has never been one of the explicit and enforceable conditions.
Moreover, accession conditionality is also a slow tool that operates through annual progress reports, screening exercises and priority negotiations, and relies on sustained dialogue. Spectrum auctions and RAN investments, by contrast, follow commercial timetables measured in weeks and months. Once licences have been awarded, supplier choices become sunk costs.
The EU’s largest contribution in the telecom sector is a first-loss guarantee, backing multilateral loans from the EBRD and the IFC for a merger led by NJJ, a French investment vehicle. The concessional element is estimated at just 6 per cent of the project cost. Direct funding is relatively minor and is dedicated to supporting regulators rather than network deployment. One such programme, DRS2UA, provides €2.7 million over three years.
Similarly, Sweden’s contribution is civilian cybersecurity and institutional cooperation, while Finland provides a €30 million export credit (i.e. not aid) to back Nokia deliveries to Vodafone Ukraine.
In conclusion, the EU has mobilised more support for Ukraine than for any country in its history, and Sweden and Finland may be two of Kyiv’s most committed donors per capita. Meanwhile, the European direct contributions for the private operators are relatively minor. And here lies an embarrassment for von der Leyen, Kristersson and Stubb: Ukraine is building its 5G rollout on Huawei – despite donated Gripen fighter jets, Leopard mine-clearers and the €50 billion Ukraine Facility, their support has not yet induced Kyiv to exclude Chinese vendors from its market.
Why the EU, Sweden, Finland and the US Fell Short
In other words, Washington, Brussels, Stockholm and Helsinki have invested heavily in regulatory convergence while leaving operators to fund the transition to trusted infrastructure on their own. In fairness, the Member States that implemented vendor exclusions imposed much the same conditions on their own operators, and equally without allocating public funds.
None of the EU instruments for Ukraine condition financing on the choice of EU or US vendors. Threatening to reduce EU financial support would likely prove counterproductive. Cutting financing would only tighten operators’ constraints and increase the attraction of Chinese financing, since the supplier offering the easiest access to capital has the greatest chance of supplying the equipment. Since the installed base is predominantly Chinese, withdrawing EU support will not discipline Kyiv and will only make Beijing’s offer more attractive, despite the potential risk of rip-and-replace orders further down the line.
The precedent dates from 2015, when the China Development Bank (CDB) financed a Huawei-supplied modernisation of Ukrtelecom’s fixed network with a US$50 million loan at 9.34 per cent, secured against the operator’s own assets. CDB stepped in when no one else would lend to a Ukrainian telco while the country was at the bottom of the sovereign restructuring that followed Russia’s 2014 invasion, and the central bank rate stood at 30 per cent. The formula has not changed: Chinese financing bundles equipment, credit, implementation and maintenance into a single commercial contract, while European export credits come wrapped in OECD rules, sustainability compliance and a due-diligence apparatus that took the Finnvera–Nokia deal a year to travel from memorandum to money.
In brief, while the EU funds the Ukrainian government, China addresses operators’ needs. Therefore, Finland, the US, Sweden and the EU cannot simply impose more conditionality to align their financial instruments with European security objectives.
- Trusted-supplier requirements must be accompanied by more accessible guarantees, export credits and reconstruction finance for operators to fund the migration away from existing suppliers. This is evident in the fixed access market, where consolidation brought European owners and credit into the sector: the French-led NJJ group acquired Datagroup, Volia and Lifecell and created an entity that combined fibre, cable and mobile on the back of US$435 million in EBRD/IFC lending and EU-French guarantees. The new conglomerate chose Nokia, Cisco and Ericsson as suppliers of GPON, transport and core networks, respectively.
- However, the window of action on the 5G market is short. For the EU and the US to have a viable case, they must ensure that the right regulator is designated before the auction opens, and fund that regulator to the hilt. The current regulatory assistance is likely only one-tenth of what the agency needs, and the EU and the US have only days, not months, to ensure that “trust” requirements are built into the auction unless it can be delayed.
- The Trump administration also retains a unique tool – the US–Ukraine Reconstruction Investment Fund (URIF), which already prioritises ICT infrastructure and has so far bought one drone-radio start-up. A minority stake in a network operator could have a signalling effect, especially if it is structured as primary capital and combined with DFC political-risk insurance (in the event of further Russian attacks) and European or multilateral co-financing.
Within days, Ukraine may not just establish the market price for its spectrum, but also the price of the security policy that Europe wants attached to it.