Category Archives: Uncategorised

Teliasonera writes off $622m of value from its Uzbek operations

JAN. 14 2016 (The Conway Bulletin) — Swedish telecoms company TeliaSonera effectively slashed the value of its assets in Uzbekistan by 5.3b Swedish kronor ($622m) to speed up a fire sale of its unit which it considers toxic after it was heavily implicated in a major corruption scandal.

Since last September, TeliaSonera has sought to sell off its businesses in Central Asia and the South Caucasus so that it can concentrate on its core mobile and data services in Europe.

TeliaSonera is under investigation in the Netherlands, Sweden and the US over its acquisition of mobile licenses in Uzbekistan in 2007. Prosecutors say the deal involved paying large bribes to the Uzbek president’s eldest daughter, Gulnara Karimova. Rival Norwegian telecoms company Telenor has also been accused of bribing Uzbek officials.

The cut in value of Teliasonera’s Uzbek assets, which will be booked on its Q4 2015 operations, is part of a 7.2b Swedish kronor ($845m) cut in the company’s global assets.

“We are well on track shaping the new TeliaSonera and the process to reduce our presence in Eurasia continues,” Teliasonera CEO, Johan Dennelind, said in a statement.

“As a consequence of this progress and current status in the overall divestment process, Region Eurasia will be reported as discontinued operations. When doing this we are obliged to change valuation method for these operations. This has resulted in an impairment charge relating to our operations in Uzbekistan.”

In its forthcoming 2015 annual report, due later this month, TeliaSonera will block out results from the Eurasia region and tag it “held for sale”.

ENDS

(News report from Issue No. 263, published on Jan. 15 2016)

Georgian President approves redistricting

JAN. 8 2016 (The Conway Bulletin) – Georgian president Giorgi Margvelashvili signed into law a redistricting of constitutional boundaries, part of a move in Georgia to do away with so-called majoritarian seats in parliament. Of Georgia’s 150-seat parliament, 103 are made up of majoritarian, although the size of these seats varies from 9,000 to 150,000 people. The redistricting is the first step in a process designed to even out this imbalance.

ENDS

(News report from Issue No. 263, published on Jan. 15 2016)

Kazakhstan signals early parliamentary election

JAN. 13 2016, ALMATY (The Conway Bulletin) — Kazakhstan will likely hold a parliamentary election this year after MPs officially asked President Nursultan Nazarbayev to dissolve the current parliament.

They said that parliament had achieved the mandate it was given at the start of the current parliamentary cycle, although with the Kazakh economy in a perilous state, they may also have decided that it would be far better to deal with an election now rather than wait until 2017.

Kazakhstan’s 107-seat Lower Chamber voted unanimously to approve the dissolution of parliament in what was likely a choreographed decision. All 107 seats are held by pro-Nazarbayev MPs with his Nur Otan party dominating the chamber.

Last year, Kazakhstan also brought forward its presidential election by two years, officially to avoid a clash with the parliamentary election set for 2017.

Election monitors said that by bringing forward the presidential election, Mr Nazarbyaev was able to wrong foot opponents and secure an easy re-election.

Since independence from the Soviet Union in 1991, Kazakhstan has never held an election judged free and fair by Western election monitors.

Under Kazakh law, after officially consulting with the Speakers of the Lower and Upper Chambers of Parliament as well as with Prime Minister, President Nazarbayev can call an early parliamentary election.

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(News report from Issue No. 263, published on Jan. 15 2016)

Car sales drop in Kazakhstan

JAN. 11 2016 (The Conway Bulletin) — The Association the Kazakh Auto- mobile Business said authorised dealers in the country sold cars worth $1.9b in Jan.-Nov. 2015, about 43% less than than the same period last year. The Association also said that sales of cars produced in Kazakhstan fell by 50% to around $355m.

ENDS

(News report from Issue No. 263, published on Jan. 15 2016)

UK’s Alpha and Uzbekistan’s Fayz Farm sign deal

JAN. 14 2016 (The Conway Bulletin) — UK-based Alpha Pharm Trading and Uzbekistan’s Fayz Farm signed a deal to create a joint venture to produce medicines in the Navoi free industrial economic zone. The joint venture, called Novo Farm Komplekt, will invest $3.7m in a factory and distribution centre for pharmaceutical products.

ENDS

(News report from Issue No. 263, published on Jan. 15 2016)

Kyrgyz directors at Centerra Gold argued against shares

BISHKEK, JAN. 13 2016, (The Conway Bulletin) — In an interview with local media, senior Kyrgyz government officials said they had pushed hard against the issue of an extra 4.6m shares in Centerra Gold, the Canadian mining company in which Kyrgyzstan owns a 32.7% stake.

Centerra Gold owns the Kumtor gold mine, Kyrgyzstan’s most important economic asset. The interview with local media again shows how far apart Kyrgyzstan and Centerra Gold are on their various strategies.

Kylychbek Shakirov, a government-appointed board member at Centerra Gold, told media that he and his two Kyrgyz colleagues voted against issuing the shares, as this measure would dilute the total stake that Kyrgyzstan owns in the company.

“The Board of Directors of the company at the extraordinary session on December 17, 2015, made the decision to issue 4.6m additional shares,” Mr Shakirov said.

“We failed to achieve cancellation of the previous decision because three members of the board voted against issuance of new stocks and 8 members voted for it.”

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(News report from Issue No. 263, published on Jan. 15 2016)

Georgian company to build new Tbilisi hotel

JAN. 11 2016 (The Conway Bulletin) — Georgian company Bloc Invest and Partnership Fund, a government operated business fund, will jointly build a three-star Radisson hotel in central Tbilisi. The construction of the $25m hotel will begin in the summer of 2016 and is planned to be completed in 2017. The new hotel will be built in the place of the Hotel Tori, a four-star hotel in the centre of the city. Major hotel chains have been piling into Tbilisi in the last few years.

ENDS

(News report from Issue No. 263, published on Jan. 15 2016)

Currencies: Azerbaijan’s manat, Kazakhstan’s tenge

JAN. 15 2016 (The Conway Bulletin) — In Azerbaijan, people took to the streets to protest against inflation and unemployment. The manat grew slightly to 1.58/$1, but what angers people most is the increase in prices, especially for imported goods.

In Kazakhstan, the tenge depreciated further to 366/$1, a 6% drop on the previous week. Many worry now that there could be no end to the downward spiral.

In Tajikistan, the somoni lost an additional 2% this week, trading at 7.38/$1. The currency slide in the country doesn’t seem to slow.

In Kyrgyzstan the Central Bank has kept the som stable at 75.9/$1 by intervening several times in the currency market. The Georgian Central Bank also protected the lari with a few interventions. In Azerbaijan and Turkmenistan, the governments imposed further restrictions on the trade of foreign currencies, by limiting licenses to banks, airports and, in Azerbaijan’s case, hotels.

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(News report from Issue No. 263, published on Jan. 15 2016)

Business comment: Non-performing economies

JAN. 15 2016 (The Conway Bulletin) — Non-performing loans (NPLs) are a good barometer of a country’s economic health. A low proportion of NPLs means bank customers are in a stable financial position and able to pay back the capital they borrowed.

During economic crises and downturns, the proportion of NPLs is among the first factors, together with inflation in weaker economies, to surge, denting the banking sector’s ability to finance growth.

In Kazakhstan, NPLs shot up to 31-33% of overall lending in 2010/12, an upward trend that the government tried to address in 2013 and 2014, managing to bring the proportion back to around 10%. The positive development was, in fact, a statistical shortcut, as in Q2 2015 the government excluded BTA Bank and its toxic loan portfolio from the accounting.

The sudden depreciation of the tenge, linked to the Central Bank’s decision to abandon the peg to the US dollar in August, will put an increasing pressure on the quality of bank assets.

Now analysts expect figures to worsen.

In the first nine months of 2015, lending slowed significantly and the impact of the rapid fall of the tenge may well impact Q4.

What’s worrying analysts is the share of foreign currency loans, which has increased in the past months. With the depreciation of the tenge against the US dollar this means that they will be more expensive to service.

In Armenia, non-performing loans increased in November, from 1.6% to 1.8% of the total, but there is a worry that the drought in migrant workers remittances from abroad and the drop in demand for banking services may increase the figure further.

ENDS

(News report from Issue No. 263, published on Jan. 15 2016)

Kyrgyzstan-Uzbekistan border dispute arises

JAN. 11 2016 (The Conway Bulletin) – Kyrgyz soldiers accused Uzbekistan of shelling their positions around the border in the south of the country, media reported. Uzbekistan and Kyrgyzstan often trade barbed comments and accuse each other of infringing one another’s territory around their shared border areas. Analysts have said these disputes could destabilise the region.

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(News report from Issue No. 263, published on Jan. 15 2016)