JAN. 17 (The Conway Bulletin) — New York-listed telecoms firm Veon which operates the Beeline brand appointed Evgeniy Nastradin to be the new CEO of its Kazakh operations. Mr Nastradin had previously been Beeline Kazakhstan’s COO. He replaces Aleksandr Komarov who moves to Veon’s brand in Ukraine, Kyivstar.
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>>This story was first published in issue 397 of The Conway Bulletin on Jan. 20 2019
ALMATY/DEC. 28 (The Conway Bulletin) — A fortnight after Swedish-Finnish telecoms company Telia exited Kazakhstan, its Stockholm-based rival Tele2 said it was also going to sell its stake in Altel, its joint-venture with Kazakhtelecom.
Tele2 said an option in its joint-venture agreement with state-owned Kazakhtelecom allowed it to sell its 49% stake in Altel and that it expected the deal to be concluded in six months.
“The transaction between Kazakhtelecom, Telia Company and Fintur announced on Dec. 12, in which Kazakhtelecom acquires control of Kcell, triggers the possibility for Tele2 to exercise its put option and sell its shares in the JV to Kazakhtelecom, as the JV agreement includes customary non-compete clauses,” Tele2 said in a statement.
“To initiate this process, Tele2 has today filed a put option notice to Kazakhtelecom.” Tele2’s exit means there will be no major involvement by Western companies in the Kazakh telecoms sector.
Telia, and Fintur its Netherlands-registered JV with Turkcell, had been keen to quit Central Asia since a corruption scandal centred on its Uzbek operations earned it a fine of $1b in 2017 but Tele2 had given no indication that it wanted to quit too. Tele2 had merged its Kazakh operations, which it set up in 2010, with Altel in March 2016.
In October, Tele2 CEO Allison Kirkby had said in Q3 results that Altel “continues its tremendous journey”.
Industry website telecompaper.com said the decision to sell was linked to Tele2’s strategy to concentrate on markets in Europe.
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>>This story was first published in issue 396 of The Conway Bulletin on Jan. 11 2019
JAN. 1 (The Conway Bulletin) — MTS, the Russian telecoms company, said it had started to pack up equipment in Turkmenistan, suggesting that it doubts it will ever be able to repair relations with the Turkmen government which switched off access to its network in Sept. 2017. MTS has filed a legal case against the Turkmen government for lost profit. Turkmenistan had suspended MTS’ operations previously in 2010 but 18 months later agreed to allow the Russian company to resume trading.
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>>This story was first published in issue 396 of The Conway Bulletin on Jan. 11 2019
SEPT. 22 (The Bulletin) — Swedish prosecutors charged former Telia CEO Lars Nyberg, former deputy CEO and head of its Eurasia division Tero Kivisaari and a third unnamed senior executive with authorising bribe-paying to access Uzbekistan in 2007/8. The charges came a day after Telia agreed to pay a fine of $965m to settle the bribe-paying allegations.
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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.
— Copyright the Central Asia & South Caucasus Bulletin 2017
SEPT. 21 (The Bulletin) — In a settlement with the US authorities, Swedish telecoms company Telia agreed to pay a fine of $965m for bribing its way into the Uzbek mobile market in 2007/8. The fine is smaller than had first been mooted. Telia paid a Gibraltar-based company ultimately owned by Gulnara Karimova, the daughter of former Uzbek leader Islam Karimov, at least $330m.
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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.
— Copyright the Central Asia & South Caucasus Bulletin 2017
TASHKENT/SEPT. 21 (The Bulletin) — Veon, the New York-listed Amsterdam-headquartered telecoms company formerly called Vimpelcom, said that that the liberalisation and devaluation of the Uzbek soum had cost it hundreds of millions of dollars.
Earlier this month, the Uzbek government scrapped a US dollar peg for the Uzbek soum, allowing it to lose half its value. The move was generally applauded as necessary to modernise Uzbekistan’s economy and for giving foreign investors clarity but businesses already entrenched in Uzbekistan said there would be a cost.
Veon, which operates the Unitel subsidiary in Uzbekistan under the Beeline brand, said there were advantages in the long-run but that, in the short term, profits were lower.
“Under these liberalized exchange rules, Veon may in the longer term be able to more effectively repatriate cash from Uzbekistan,” it said in a statement.
“[But] as a result [of the devaluation], Veon expects annualised decreases in revenues of $300-350m and in underlying EBITDA of $175-225m.” These comments are important as they come from a company already doing business in Uzbekistan.
Veon has previously been fined for paying a bribe to a company ultimately owned by the daughter of Uzbek president Islam Karimov for market access to Uzbekistan in 2007/8.
Sweden’s Telia and Norway’s Telenor have also been fined for paying bribes in Uzbekistan.
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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.
— Copyright the Central Asia & South Caucasus Bulletin 2017
BAKU/SEPT. 19 (The Bulletin) — Azerbaijani media said that The European Bank for Reconstruction and Development (EBRD) was potentially interested in buying a stake in its largest bank, the International Bank of Azerbaijan (IBA).
Suma Chakrabarti, the EBRD’s president, was in Baku earlier in the month, although he doggedly denied the EBRD’s interest in IBA.
“I was there last week, we spoke to Azerbaijani President Ilham Aliyev, we said we would be happy to help in restructuring and refocusing of this bank,” he was quoted as saying.
The speculation has been triggered by comments from senior government officials who said that they wanted to sell off chunks of IBA, which restructured $3.3b of debt earlier this year, in 2018.
Azerbaijan’s government effectively bailed out IBA this year by increasing its stake in the bank, which dominates the Azerbaijani banking market, to 76.7% from 55%. Azerbaijan’s economy has been particularly badly hit by a fall in the price of oil since mid-2014 and has fallen into a recession.
Bad loans at banks have also multiplied and in May, Moody’s the ratings agency, said that the government had spent 18% of its GDP on propping up its banking sector.
The EBRD has a history of intervening in the financial sector in Central Asia and the South Caucasus. Earlier this year it agreed to increase its stake in Azerbaijan’s Unibank to help it stave off bankruptcy.
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— This story was first published in issue 344 of The Conway Bulletin, now called the Central Asia & South Caucasus Bulletin, on Sept. 24 2017.
— Copyright the Central Asia & South Caucasus Bulletin 2017
ALMATY, JULY 20 2017 (The Bulletin) — Macroeconomic conditions in Kazakhstan are improving, Kcell, the Kazakh mobile operator part-owned by Swedish-Finnish Telia, said in its first half report, an important view of Central Asia’s biggest economy.
Kcell’s revenue from sales was down by 1.1% in the first half of the year compared to the same period in 2016 at 71.54b tenge ($219.5m) but this was due to changes in tariffs and the tough market conditions in mobile operations.
More importantly, Kcell CEO Arti Ots said, the economy was starting to show sustained growth after three years of stagnation.
“In the first half of 2017, we saw continued improving trends in both macroeconomic indicators and the market environment in Kazakhstan,” he said. “In the domestic telecoms market, as previously reported, ongoing tariff adjustments are starting to give a positive impact, which we expect to see the results of in the second half of the year.”
Kcell reports are watched carefully by analysts as they are considered to give a balanced corporate view of Kazakhstan’s economy. Like the rest of the region Kazakhstan has been trying to shake off a tough three years linked to a collapse in oil prices and a recession in Russia.
Economists have also said the outlook for Kazakhstan has improved this year. The Kazakh Central Bank has said inflation is easing and the World Bank has estimated that GDP will grow at around 2.2% this year, compared to 1% in 2015 and 2016.
Kcell is fighting a 9b tenge fine for late payment of taxes in 2012-15 handed out this year by the Kazakh authorities, which it says is unfair. It said in its H1 report that it didn’t expect to have to pay the full fine. Telia is looking to sell its stakes, owned directly and indirectly, in Kcell after a corruption row focused on its operations in Uzbekistan tarnished its reputation.
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Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved
(News report from Issue No. 337, published on July 27 2017)
JULY 14 2017 (The Bulletin) — Telia, the Swedish-Finnish telecoms company, said that it had written off the value of Ucell, its Uzbek subsidiary, by 2b Swedish krona ($245m) to 1.3b krona ($160m) because of currency and regulatory risks. It wants to sell out of Central Asia after a corruption row focused on its Uzbekistan unit. Earlier this year it sold its majority stake in Tajikistan’s Tcell to the Aga Khan. It appears to be having more difficulty offloading Ucell and its majority stakes in Kazakhstan’s Kcell, Azerbaijan’s Azercell and Georgia’s Geocell.
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Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved
(News report from Issue No. 337, published on July 27 2017)
ALMATY, JULY 5 2017 (The Bulletin) — Kcell, the biggest Kazakh mobile operator, said that Kazakhstan’s tax authorities have handed it a 9b tenge fine ($27.4m) for unpaid taxes.
In response Kcell, majority owned by Swedish -Finnish operator Telia, said it would dispute the fine, setting up a potentially explosive court fight between a Western corporate and the Kazakh government.
“Following the audit (of our accounts for 2012-15), the tax authority has made a total claim of 9b tenge, of which 5.8b tenge is for unpaid taxes and 3.2b tenge represents fines and penalties for late payment. Kcell intends to dispute this claim through the available mechanisms, which includes court litigation,” Kcell said in a statement.
For both parties a lengthy court battle is poor timing. After a corruption scandal in Uzbekistan centred on paying the daughter of former Uzbek leader Islam Karimov for market access, Telia said it wants to exit the former Soviet Union. As well as its stake in Kcell, it plans to sell out of Uzbekistan Ucell, Azerbaijan’s Azercell, Moldova’s Moldcell and Georgia’s Geocell.
Kazakhstan wants to woo finance companies into setting up in Astana, where it is building an investment centre. Headlines highlighting rows will damage this drive.
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Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved
(News report from Issue No. 336, published on July 16 2017)