Tag Archives: telecoms

End Game at Kazkom

MAY 27 2016 (The Conway Bulletin) — For the past six months, Kazkommertsbank, Kazakhstan’s largest lender, has been hogging the news flow.

Every week, board members have been changed, shares were bought and sold and agreements were signed.

Now it has become clear that by the end of the year, Kenes Rakishev will seize full ownership of the bank. He has already accrued a 71% stake over the past few weeks and has proposed to buying out the remaining minority shareholders.

One of them, importantly, is Samruk-Kazyna, Kazakhstan’s sovereign wealth fund.

In early 2009, as the fallout of the Global Financial Crisis sank Kazakhstan’s banking sector, Samruk-Kazyna paid around $1b to boost KazKom’s capital and refinance corporate loans. The bailout resulted in Samruk-Kazyna owning a 21% stake in the bank.

Samruk-Kazyna gradually reduced its stake in the second half of 2014 and said it is now ready to sell its remaining 10.72% stake to Mr Rakishev. This will likely be the end of a saga that has seen KazKom take over the beleaguered BTA Bank and drop its founding chairman Nurzhan Subkhanberdin.

Now it’s time for Mr Rakishev, son-in-law of defence minister Imangali Tasmagambetov, to be at the helm and use KazKom for his business interests.

Many, however, believe Mr Rakishev will serve the interest of the highest echelons in Astana.

In essence, this means ownership of the two largest banks in Kazakhstan – KazKom and Halyk Bank – are concentrated in the hands of people close to the top of the Kazakh elite. Mr Rakishev owns KazKom, Timur Kulibayev and his wife, Pres. Nazarbayev’s daughter, own Halyk Bank.

ENDS

(News report from Issue No. 282, published on May 27 2016)

Telecoms tech boost in Kyrgyzstan

MAY 19 2016 (The Conway Bulletin) — Kyrgyz telecoms operator Sky Mobile said it has introduced 4G technology across Kyrgyzstan. Sky Mobile, which operates under the Beeline brand, is Kyrgyzstan’s second-largest mobile operator. In September last year, Kyrgyzstan rolled out 4G frequencies. Sky Mobile is a subsidiary of Russia-based and New York-listed Vimpelcom. In its quarterly results this month, it said that Kyrgyz were spending more on their mobiles.

ENDS

(News report from Issue No. 281, published on May 20 2016)

Revenues fall at VimpelCom’s regional subsidiaries

ALMATY, MAY 12 2016, (The Conway Bulletin) – Revenues at Russian mobile operator VimpelCom’s Central Asia and the South Caucasus operations were sharply down in the first quarter of 2016 compared to the same period in 2015, a sign of the continuing economic malaise that has undermined consumer confidence in the region.

In Armenia, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, VimpelCom operates under the Beeline brand. Its customer base in the region shrank by 6% to just above 24m, roughly in line with figures released last month by its rival TeliaSonera.

In Kazakhstan, VimpelCom said that revenue from its mobile operations was just under 24b tenge in Q1, 10% lower than 2015, and that its subscriber base had fallen 4% to 9.2m.

The Kazakh mobile market has become increasingly competitive. Sweden’s Tele2 merged with Kazakhstan’s Altel earlier this year and has been undercutting its bigger rivals.

In its quarterly report, VimpelCom said that prices would stay low.

“Competition remains intense, however, although the company continues to maintain its commercially rational pricing strategy,” it said. “Beeline expects the competitive environment to remain challenging throughout 2016.”

And, other than in Uzbekistan were a new pricing strategy had sustained revenues, it was a similar story in other subsidiaries. In Georgia revenues were down 30% in US dollar terms and in Tajikistan down 27%.

VimpelCom said of the drop in revenue in Tajikistan that this was “mainly due to lower incoming international traffic as a result of fewer migrants living abroad due to the macro-economic slowdown in the region and a weakening local currency.”

A recession in Russia has heavily reduced job opportunities for migrant workers from Tajikistan, hitting remittances and economies in Central Asia.

Earlier this year, VimpelCom paid a fine of $795m after it admitted paying bribes in 2007/8 to access the Uzbek mobile market.

ENDS

(News report from Issue No. 280, published on May 13 2016)

Kyrgyzstan’s Aktel cuts service

MAY 7 2016 (The Conway Bulletin) – Kyrgyz mobile operator Aktel discontinued its mobile services after it let its licence expire. In December 2013, a court in Bishkek declared Aktel bankrupt and said its debt amounted to around $147m. Aktel previously operated under the brand names of Fonex and 7Mobile. It has now transferred its assets, but not its debts, to Jeti Mobile.

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(News report from Issue No. 280, published on May 13 2016)

Huawei and Uzbek telecom start JV

MAY 9 2016 (The Conway Bulletin) – China’s Huawei Technologies and Uztelecom, Uzbekistan’s state owned telecoms company, said they will start a joint venture, called Broadband Solutions, to produce telecoms kits. The new company will be based in the Jizzak special economic zone, around 100km northeast of Samarkand. Uztelecom will take a 51% stake in the joint venture, Huawei will own the rest. The deal valued the company at around $6m.

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(News report from Issue No. 280, published on May 13 2016)

Business comment: Corruption in telecoms

MAY 3 2016 (The Conway Bulletin) – Telia Company, the re-branded version of Swedish company TeliaSonera, scored a small victory this week as Swedish prosecutors dropped a bribery case related to its dealings in Azerbaijan in 2008.

Allegedly, it paid bribes to public officials to obtain licences for its subsidiary, Azercell, but prosecutors said they couldn’t prove their claims.

This, though, still leaves Telia, and other companies, entangled in an investigation linked to corruption in Uzbekistan, where they allegedly paid hundreds of millions of US dollars to obtain licences.

The beneficiary of the bribes is said to be Gulnara Karimova, the once-extravagant eldest daughter of Uzbek President Islam Karimov.

VimpelCom, an Amsterdam- based Russian company, has already settled its Uzbek bribery case with US and Dutch courts by paying a penalty of $795m, effectively admitting wrongdoing.

The Uzbek case had negative repercussions across Scandinavia.

In Sweden, perhaps in an effort to erase recent memories, TeliaSonera changed its name, colours and branding and is now registered as Telia Company.

In Norway, heads started rolling last year at the state-owned telecoms company Telenor, which owns 33% in VimpelCom.

CEO Svein Aaser was sacked in November and the Norwegian former CEO of VimpelCom Jo Lunder was arrested a few days later.

Last autumn, both Telia and Telenor said they wanted out of their operations in the South Caucasus and Central Asia, allegedly because of market pressures, but their exit, rebranding and apologies can only really be read as last minute attempts to pull their hands out of the cookie jar.

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(News report from Issue No. 279, published on May 6 2016)

Sweden drops Telia bribery case in Azerbaijan

MAY 3 2016 (The Conway Bulletin) – Prosecutors in Sweden dropped an investigation into alleged bribe paying by TeliaSonera, now called Telia Company, in Azerbaijan, relieving the pressure on the Nordic region’s biggest telecoms company but disappointing corporate governance campaigners.

Scrapping the investigation also ditches a potentially embarrassing public hearing for Azerbaijani President Ilham Aliyev and his family into their personal affairs. TeliaSonera was alleged to have paid millions of dollars indirectly to Mr Aliyev and his family for access to Azerbaijan in 2008.

Prosecutors said they could neither prove the bribery allegations nor Telia’s intent.

Allegations of the payment emerged in mid-2014, nearly two years after TeliaSonera was accused of paying a $375 million bribe to Gulnara Karimova, the eldest daughter of Uzbek President Islam Karimov, for access to Uzbekistan.

“With the tools we have at our disposal, we can’t prove bribery,” Gunnar Stetler, Sweden’s prosecutor, told Reuters in an interview.

Telia said the ruling marked another departure from the company’s more murky past.

“After today’s decision, there are no ongoing Swedish investigations that relate to Telia Company, except for the investigation regarding Uzbekistan,” Telia said in a statement.

Telia is linked to investigations in Sweden, the Netherlands, the US, Switzerland and Norway into alleged corruption linked to Ucell, its subsidiary in Uzbekistan.

Last September, Telia said it wanted to sell off its assets in the South Caucasus and Central Asia. Turkish telecoms company Turkcell, in which Telia owns a stake, said it was interested in buying some of these companies.

ENDS

(News report from Issue No. 279, published on May 6 2016)

Telenor official quits after Uzbek bribery investigation

MAY 3 2016 (The Conway Bulletin) – Norwegian telecoms company Telenor said its CFO Richard Olav Aa and General Counsel Pal Wien Espen resigned after an internal investigation on alleged corruption at VimpelCom — of which Telenor owns 33% — in Uzbekistan. The investigation concluded that although there had not been any corruption within Telenor, weak structures within the company had allowed corruption within VimpelCom to exist. In February, VimpelCom admitted to paying $115m in bribes to officials in Uzbekistan.

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(News report from Issue No. 279, published on May 6 2016)

Kazakhstan and Russia ease international calls

APRIL 25 2016 (The Conway Bulletin) – Kazakhtelecom and Rostelecom, the national telephone operators in Kazakhstan and Russia, agreed to cut costs for phone calls between the two countries. Around 80% of international phone calls from Kazakhstan are to Russia.

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(News report from Issue No. 278, published on April 29 2016)

Kazakh businessman takes KazKom

APRIL 28 2016 (The Conway Bulletin) – Kazakh businessman Kenes Rakishev was made chairman of Kazkommertsbank, the company said in a statement. KazKom is the country’s largest bank by assets. Marc Holtzman, who previously served as chairman, will now be the CEO. This completes a takeover process that lasted for two years and involved KazKom’s acquisition of debt-ridden BTA Bank. KazKom’s former majority owner Nurzhan Subkhanberdin resigned as chairman last year.

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(News report from Issue No. 278, published on April 29 2016)