ALMATY, JAN. 27 2017 (The Conway Bulletin) — Kcell, Kazakhstan’s biggest mobile operator, felt the full force of the regional economic slowdown in 2016 with revenues falling 12.7% to 147b tenge ($444m), its lowest since 2009.
Kcell’s annual reports are important because they provide one of the few open and accurate insights into how Kazakh companies are handling a sharp economic slowdown triggered by falling oil prices and a recession in Russia.
The company, which is part- owned by the Kazakh government and part-owned by Sweden’s Telia, also said that a drop in profit margin had reduced its overall profit by 41% to just over 31b tenge ($94.5m).
In a statement, Kcell CEO, Arti Ots, admitted that 2016 had been tough.
“2016 was extremely challenging for Kcell, although at the end of the year we saw early signs of market stabilisation,” he said.
“As we move into 2017, there are positive signs of economic recovery in Kazakhstan, with an easing in consumer price inflation and indications of growth in the economy.”
A collapse in the value of the tenge, economic stagnation, job losses and a fall in vital remittance values all hit the Kazakh economy in 2016.
The specific improvements that Mr Ots referenced include a boost to revenues from demand for contract phones which has fed through into a third consecutive quarter of revenue increase.
“We are now seeing a positive interconnect balance with revenue exceeding costs and we expect this situation to continue in 2017,” he said.
The details of Kcell’s financial results also reflect the turbulence of the Kazakh economy, including rising inflation. Kcell said that costs had risen by 19.2% in 2016 to nearly 11b tenge ($33.5m). A spokesperson for the company said that some of this cost increase was triggered by a rise in staffing costs at new outlets.
ENDS
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(News report from Issue No. 314, published on Jan. 27 2017)
