Tag Archives: telecoms

Kazakh Kcell reports lowest Q revenue since IPO in 2012

ALMATY, APRIL 20 2016, (The Conway Bulletin) — Kazakhstan’s telecoms sector continues to limp through an economic downturn that has knocked consumer confidence and dented sales.

Kcell, the largest mobile operator, said in quarterly results that its year- on-year revenues fell by 17.7% in Q1 2016 to 35.5b tenge ($107m), its lowest since an IPO in 2012.

Prices have fallen in the ultra competitive Kazakh telecoms sector with Sweden’s Tele2 and Altel undercutting the tariffs of the two dominant companies — Kcell, majority owned by Telia Company, and Russia’s Vimpelcom which trades under the Beeline brand. Telia Company is the rebranded name for TeliaSonera.

Tele2 and Altel completed their long touted merger in February.

A combination of low oil prices and a recession in Russia has triggered an economic downturn in Kazakhstan and Central Asia. Consumer spending is down and companies are laying off workers.

Kcell CEO Arti Ots highlighted the impact of the poor economic conditions in a statement alongside the quarterly results.

“As expected the first quarter of the current year has been challenging,” he said.

“We are not seeing any significant signs of a market recovery, but there have been some indications that the intense downward pressure on pricing we have experienced in recent years is starting to ease.”

In Q1, Kcell said it lost 9% of its subscribers. More importantly, perhaps, Kcell said that the average revenue per user fell by 7% despite a strong uptake in data traffic.

In her own quarterly results, Tele2 CEO Allison Kirkby confirmed that the company had grabbed market share and that revenues had grown but also that Kazakhstan’s turbulent economy had dented profits.

“EBITDA [a profit measure] is impacted by both business expansion and the significant devaluation of the Kazakh tenge,” she said (April 21).

The tenge lost 50% of its value against the US dollar last year.

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(News report from Issue No. 277, published on April 22 2016)

Kazakh mobile operator maintains dividend

APRIL 12 2016 (The Conway Bulletin) – Kcell, Kazakhstan’s largest mobile operator, said it would pay out 50% of its 2015 profits in dividends, disappointing investors and analysts, who expected a higher return. At 117 tenge per GDR ($0.35), this year’s dividend is lower than the $1.54 per GDR it gave out last year. Analysts at Halyk Bank expected the dividend to be around 70% of Kcell’s profits this year. Kcell revenues fell 10% in 2015 as tougher competition and an economic downturn combined to hit sales.

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(News report from Issue No. 276, published on April 15 2016)

Business comment: Dividends Et Impera

APRIL 15 2016 (The Conway Bulletin) – Dividends make investors happy, when they are issued, that is.

Kazakhstan’s largest publicly-traded companies have embarked on different dividend policies to weather an economic downturn that has, frankly, clobbered markets.

This week, mobile operator Kcell, which is part-owned by Sweden’s TeliaSonera and whose GDRs are listed in London, decided to give out 50% of its profits as dividend to its shareholders.

And, sticking to a long-held company policy, London-listed Central Asia Metals said it would pay out a total dividend of 12.5p.

At the opposite end of the dividend strategy spectrum, KMG EP and Halyk Bank, whose GDRs are also listed in London, ditched their annual payout to shareholders.

Both companies had traditionally given a piece of their profits to shareholders in the past.

KMG EP, a subsidiary of state-owned Kazmunaigas, said a collapse in oil prices over the past couple of years meant it couldn’t afford to pay out dividends and in a terse statement, Halyk Bank, owned by Timur Kulibayev and his wife Dinara Kulibayeva, daughter of President Nursultan Nazarbayev, said it too wouldn’t give shareholders a handout this year.

Halyk Bank didn’t explain its decision but Kazakhstan’s banking sector is bracing itself for an increase in non-performing loans linked to a 50% fall in the value of the tenge last year Broadly, these two different strategies provide an insight into Kazakh corporate mindset. Those companies with a stronger link to the Kazakh government and the political elite simply don’t need to pay dividends to keep their key investors happy.

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(News report from Issue No. 276, published on April 15 2016)

Subsidiary of Kazakhtelecom stops unlimited data

APRIL 7 2016 (The Conway Bulletin) – Altel, a subsidiary of state-owned Kazakhtelecom, said it would phase out its unlimited data package because of lack of network capacity during peak hours. The measure came as a surprise for customers, who turned to online forums to complain. The telecoms market in Kazakhstan is very competitive and companies are seeking new ways to boost revenues. Altel is 49% owned by Tele2 and 51% by Kazakhtelecom.

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(News report from Issue No. 275, published on April 8 2016)

Azerbaijan and Turkmenistan to sign TASIM

MARCH 17 2016 (The Conway Bulletin) – Azerbaijan and Turkmenistan are close to signing a deal on the so called Trans-Eurasian Information Super Highway (TASIM) that aims to lay a superfast broadband cable linking Europe and Asia, media reported. The Azerbaijan-Turkmenistan deal aims to span the Caspian Sea.

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(News report from Issue No. 272, published on March 18 2016)

Armenian Orange rebrands

MARCH 14 2016 (The Conway Bulletin) – Orange Armenia, one of the players in the country’s telecoms market, is preparing to rebrand to adjust its identity to Ucom, the fibre optic cable company that bought it last September. Ucom’s green colours will soon replace Orange’s trademark tone. France’s Orange previously owned Orange Armenia.

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(News report from Issue No. 272, published on March 18 2016)

Kazakh Tele2 receives credit line

MARCH 6 2016 (The Conway Bulletin) – Kazakh mobile operator Tele2 signed an agreement for a long-term credit line with Kazkommertsbank, one of the country’s largest commercial banks. The company will use the funds to upgrade its network. Tele2 Kazakhstan and Altel completed their merger on March 1. Before the market was liberalised earlier this year, Altel, a subsidiary of state owned Kazakhtelecom, was the only company to own a 4G licence in Kazakhstan.

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(News report from Issue No. 271, published on March 11 2016)

Kazakh telecoms launch 4G

MARCH 2 2016 (The Conway Bulletin) – Telecoms companies in Kazakhstan are rolling out 4G services after the government opened the market up to competition at the end of 2015. Tele2 Kazakhstan said it launched 4G services in several central and eastern districts in Kazakhstan, building on its merger with Altel in November. Before the market was liberalised, Altel had been the only licensee of 4G services. Kcell and Beeline also said they will launch pilot 4G coverage in major cities.

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(News report from Issue No. 270, published on March 4 2016)

Turkcell submits bid for TeliaSonera’s Eurasian holdings

ALMATY, FEB. 26 2016, (The Conway Bulletin) — Turkcell, Turkey’s largest telecoms operator, said it had submitted a formal offer for TeliaSonera’s share in Fintur, a holding company that owns several stakes in telecoms operators across Central Asia and the South Caucasus.

TeliaSonera owns a 58.55% stake in Fintur. Turkcell owns the rest of the Netherlands-based company. Fintur, in turn, owns stakes in Azerbaijan Azercell, Georgia’s Geocell, Kazakhstan’s Kcell, Uzbekistan Ucell and Tajikistan’s Tcell.

If the sale goes through, the deal will reduce TeliaSonera’s exposure to the region. TeliaSonera will not, though, be able to walk away completely as the Swedish-Finnish company owns, directly and indirectly, 38% of Turkcell.

Other major Turkcell shareholders include Alfa Group and Cukurova Holding.

Many TeliaSonera shareholders had wanted the company to quit the region entirely after being accused of bribing senior officials in Uzbekistan for 3G licences nine years ago. The corruption investigation is ongoing.

In its statement, Turkcell also said it had submitted another offer for TeliaSonera’s directly owned 24% share in Kcell. If the two companies agree on the sale, Turkcell will own 75% in Kcell.

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(News report from Issue No. 270, published on March 4 2016)

Tax commitments drop in Armenian telecoms

FEB. 24 2016 (The Conway Bulletin) — Armenia’s three-largest telecoms operators paid 24.2% less taxes in 2015 compared to 2014, as an economic downturn worsened and increased competition hit their revenue stream. K-Telecom, owned by Russia’s MTS, is Armenia’s third-largest taxpayer. Its contribution to the budget declined by 36% to 18.6b drams ($38m). Russia’s VimpelCom-owned ArmenTel, one of the top ten taxpayers in Armenia, said its tax contributions fell by 6.2% to 15.5b drams ($31.5m).

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(News report from Issue No. 269, published on Feb. 26 2016)