Tag Archives: Kazakhstan

Telenor also says to quit region’s mobile phone market

ALMATY, OCT. 5 2015 (The Conway Bulletin) — Following hard on the heels of Scandinavian rival TeliaSonera, Norwegian telecoms company Telenor effectively said it wanted to quit Central Asia and the South Caucasus when it announced that it would sell its 33% stake in Russian mobile operator Vimpelcom.

Vimpelcom owns several subsidiaries in Central Asia and the South Caucasus under its Beeline brand and allegations of corruption, much like those that have dogged TeliaSonera’s companies in the region, have gathered momentum over the past year.

Vimpelcom, which is headquartered in the Netherlands, has had a rough year losing about one third of its share value because of the worsening economic downturn in Russia and the general lack of profitability for telecoms companies across the Eurasian region.

Sigve Brekke, Telenor’s CEO, said the company was leaving the post- Soviet region to focus on its core operations in Europe but analysts said the real reason may well be the allegations of bribery levelled at the Vimpelcom subsidiary in Uzbekistan. Indra Overland, a research professor at the Norwegian Institute of International Affairs, said the corruption scandal involving Vimpelcom in Uzbekistan had damaged Telenor’s reputation.

“Telenor has been badly burned by its implication in the corruption scandal in Uzbekistan,” he said.

News that Telenor wants to quit Central Asia and the South Caucasus is another blow to the region’s reputation as a place for Western companies to do business.

Overshadowed by an increasingly gloomy economic outlook which has forced currencies to devalue and inflation to rise, Western companies in Central Asia also appear to have had enough of the region’s suspect corporate governance record.

An allegation of bribery emerged against Vimpelcom subsidiaries during investigations in the US, Sweden and in the Netherlands last year. Prosecutors said Vimpelcom had paid a bribe to gain access to Uzbek mobile licences, similar to a charge levied against TeliaSonera.

Telenor’s shares could go up for sale for approximately $2.4b and analysts said Vimpelcom’s main stake- holder Mikhail Fridman might seize the opportunity to consolidate his ownership. Daniel Johansson, an analyst at Fondsfinans, told Bloomberg: “There’s zero chance that it will be someone else completely unknown, like a Western investor.”

Vimpelcom has not commented on speculation it could buy Telenor’s stake in its businesses.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Kazakh Central Bank receives more pressure

OCT. 6 2015 (The Conway Bulletin) – Piling more pressure on the Kazakh Central Bank, Vijay Mahadevan, CEO of steel maker ArcelorMittal Temirtau, said its decision to cut the tenge free from its US dollar peg in August was a good one but that it needed to devalue further. Mr Mahadevan said the tenge was overpriced against the rouble.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Inflation in Kazakhstan begins to accelerate

OCT. 7 2015, ALMATY (The Conway Bulletin) — The Consumer price Index (CPI) in Kazakhstan grew by 1% in September, official data showed, matching analysts’ predictions of accelerating inflation after a devaluation of the tenge in August.

Analysts had forecasted higher price inflation for September after the Central Bank cut its peg to the US dollar on Aug. 20, triggering a sharp fall in its value.

Halyk Finance, part of one of Kazakhstan’s largest banks, said that a drop in government spending, tighter economic policies and wage cuts had acted as a brake on inflation but it still measured 4.8%.

It said that there were inflationary pressures in the Kazakh economy but that the weaker tenge was not going to have as big an impact as analysts had thought at first.

“We do not expect weaker tenge to have a considerable effect on food price growth. We revised our year- end inflationary expectations downward to 7.1% y-o-y,” analysts Askar Akhmedov and Nurfatima Jandarova wrote in the Halyk Finance report.

These sentiments will come as a relief to the Kazakh Central Bank which has been under fire this year for its handling of the economy. Last week it raised its key interest rate to 16% from 12% to help strengthen the tenge and also dampen inflation.

One of the main inflationary pressures comes from a sharp rise in the price of petrol after the Kazakh government abandoned controls on it last month.

The official data showed that petrol prices rose 14% last month.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Starbucks opens in Kazakh city

OCT. 2 2015 (The Conway Bulletin) — Starbucks said it would open two stores in Almaty, Kazakhstan’s business capital, its first stories in Central Asia. The two stores will be located in shopping malls owned by the brand Mega. With the new opening, scheduled for 2016, Starbucks will have stores in 67 countries globally.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Kazakh CBank delays move

OCT. 7 2015 (The Conway Bulletin) – The Kazakh Central Bank will probably delay its high-profile move to Astana from Almaty because of the worsening financial crisis, Central Bank chief Kariat Kelimbetov said. The Central Bank is the last remaining major government institution based in Almaty. It was slated to move to Astana by 2017.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Kazakhstan-oriented miner borrows $352m from Russian bank

ALMATY, OCT. 7 2015 (The Conway Bulletin) — VTB Bank, majority owned by the Russian government, agreed to loan $352m to Eurasian Resources Group (ERG), highlighting the Kazakhstan-orientated miner’s need to borrow cash during a period of low commodities prices.

The company, which also operates in Africa, will use the funds to finance the upgrade of two aluminium plants in Kazakhstan.

ERG, owner of ENRC which was previously listed on the London Stock Exchange and has close connections with the Kazakh elite, has an outstanding debt with VTB of around $3b, according to Reuters.

ERG now owes Sberbank, another Russian bank, and VTB a total of $.4.4b, said Reuters. Last September, the company secured around $2.5b in financing from Chinese banks.

Earlier in June, VTB said it would postpone ERG repayment to 2021.

Alexander Mashkevich, ERG chairman, said at the time: “VTB Bank is a longtime strategic partner of Eurasian Resources Group, and the new agreement reaffirms our mutually beneficial and effective cooperation.”

The loan is confirmation of VTB’s willingness back ERG during the slump in commodities’ prices.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Poroshenko flies into Kazakhstan

OCT. 8/9 2015, ALMATY (The Conway Bulletin) — After an on-off build-up lasting months, Ukrainian president Petro Poroshenko visited Kazakh president Nursultan Nazarbayev in Astana a meeting that could upset relations between Kazakhstan and Russia.

Mr Poroshenko’s visit to Astana is a diplomatic victory for Mr Nazarbayev who wants to be viewed as a potential peace broker between Kiev and Moscow over the civil war in eastern Ukraine. Mr Nazarbayev visited Kiev last December.

At a joint press conference, Mr Poroshenko thanked Mr Nazarbayev for his support “of the sovereignty and territorial integrity of Ukraine.”

Kazakhstan has to tread a careful diplomatic tightrope as it needs to appease both its Western backers, who support Ukraine, and also Russia, with which it has close economic and political ties.

Kazakhstan has not recognised Russia’s annexation of the Crimean peninsula in 2014.

During his visit, Mr Poroshenko also met with Kazakh prime minister Karim Massimov to discuss trade opportunities that will emerge in 2016 with the establishment of a free trade zone between Ukraine and the European Union and with Kazakhstan’s accession to the World Trade Organisation.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Kazakhstan based ERG borrows $352m

OCT. 7 2015 (The Conway Bulletin) – Kazakhstan-based Eurasian Resources Group said it has opened two credit lines with Russian lender VTB, highlighting its need for cash during this turbulent economic period. The two loans total $352m and will be used to upgrade two aluminium plants.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Kazakhstan’s airline leases 4 Airbus

OCT. 6 2015 (The Conway Bulletin) — AerCap, a Netherlands-based aircraft leasing company, will provide four Airbus to Air Astana, Kazakhstan’s flagship airline. Angus Kelly, AerCap’s CEO, said the new aircrafts will be mainly used for Air Astana’s long range flights between Asia and Europe. In June, Air Astana also agreed a deal with AerCap to lease seven Airbus aircrafts starting in 2016.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)

Tethys shareholders reject Kazakh companies’ final buy-out offer

ALMATY, OCT. 7 2015 (The Conway Bulletin) — London-listed Nostrum Oil & Gas withdrew its offer to buy Tethys Petroleum, ending hopes of a merger between the two Kazakhstan- focused companies.

Shortly after Nostrum announced it had scrapped its bid, Kazakhstan- based AGR Energy submitted an offer to buy a large chunk of equity in Tethys for a premium. The AGR offer, helped Tethys shares rebound by 12% on the Canadian stock market.

Earlier the final word on the long- running Nostrum bid came from Tethys’ largest shareholder, Pope Asset Manager. It said it did not support the latest offer of 0.147 Canadian dollars per share that would have valued the company at $49.5m.

Nostrum had tried to buy Tethys’ shares for two months but a deal slipped away as the sustained oil price collapse ate into the value of energy companies in general and Tethys shares in particular.

Both companies have their main operations in Kazakhstan. The value of their assets has decreased due to the weakening Kazakh tenge against the US dollar.

Nostrum’s withdrawal was an opportunity for AGR, a company linked to the Assaubayev family. It put in an offer of $20m for a large portion of Tethys’ equity, valuing shares at 0.165 Canadian dollars. In addition, AGR also proposed a $5m loan to support short-term liquidity and the option of buying more shares.

Earlier in August, Tethys failed to conclude a $47.7m refinancing deal with AGR, which would have granted the Kazakh company a controlling stake in Tethys.

The Assaubayev family was involved in Kazakhstan’s gold sector but has since switched its focus to oil. In August 2014, it invested $62.5m into British company Max Petroleum becoming a 51% shareholder.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)