Tag Archives: telecoms

Kazakh economy improving says mobile operator Kcell

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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(News report from Issue No. 337, published on July 27 2017)

Telia writes down Ucell, Uzbek subsidiary

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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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(News report from Issue No. 337, published on July 27 2017)

Kazakh authorities slap $27.4m tax fine against Kcell

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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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(News report from Issue No. 336, published on July 16 2017)

New rules increase telecoms cost in Kazakhstan

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MAY 23 2017 (The Conway Bulletin) — Under new rules brought in to crack down on potential terrorism, telecoms companies operating in Kazakhstan will have to store details of all calls and other communications for up to two years, media reported. Rights campaigners said that the new rules were designed to crackdown on civil liberties. Telecoms analysts said that the new rules would increase prices for consumers.

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(News report from Issue No. 330, published on May 28 2017)

Telia finally sells Tajikistan’s Tcell to the Aga Khan

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DUSHANBE, APRIL 26 2017 (The Conway Bulletin) — Telia, the Swedish telecoms company, sold its 60% stake in Tajik mobile operator Tcell to the Aga Khan for $27.7m, the first in a series of sales which it plans to extract itself from Central Asia and the South Caucasus.

The final sale price was lower than the $39 agreed in September but for Telia it will be a relief to be rid of a company that it had come to see as a burden.

Last month it accused the Tajik government of effectively blocking the deal after it failed to meet a deadline to give its approval and in January, too, Telia said Tajikistan’s tax authorities had slapped a bogus tax claim against Tcell.

But the main relief for Telia will be in agreeing its first deal to sell out of one of the five companies it part- owns in the region after declaring in February 2016 that the reputational and corruption risk of business in Central Asia and the South Caucasus was too high.

Telia CEO Johan Dennelind underlined this point in a statement. “By divesting Tcell we have now taken a second step in our strategy to leave region Eurasia and we maintain the ambition to complete our exit in 2017,” he said.

Tcell is the biggest mobile network in Tajikistan. The Aga Khan, a major investor in Tajikistan, already owned 40% of Tcell.

Telia is the subject of one of the biggest bribery cases in Western corporate history after admitting that its executives paid hundreds of millions of dollars in 2007 to the daughter of then-president Islam Karimov for access to Uzbekistan’s mobile market.

Swedish media uncovered the bribe, and others paid by Russia’s Vimpelcom, in a series of investigations from 2012, causing major reputational damage to Telia’s brand.

The US and Dutch authorities prosecuting Telia had agreed a $1.45b fine for corruption but Jonas Bengtsson, the company’s General Counsel, also said on April 26 that this was likely to be cut to $1b.

“We have made progress and as a result of our discussions and in light of recent developments to date, we have adjusted our estimate of the most likely outcome and we are therefore changing our provision to reflect the best estimate,” he said.

“The new provision amounts to $1b.”

Telia’s other companies in the region are Ucell in Uzbekistan, Kcell in Kazakhstan, Azercell in Azerbaijan and Geocell in Georgia. It owns these stakes with Turkey’s Turkcell through the Netherlands-registered holding company Fintur.

Telia is in talks to sell its 58.5% stake in Fintur to Turkcell.

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(News report from Issue No. 326, published on April 28 2017)

Tele2 posts upbeat Kazakh assessment

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ALMATY, APRIL 24 2017 (The Conway Bulletin) — Swedish mobile operator Tele2 said that its joint venture in Kazakhstan with Altel in February last year was working out with revenues rising 14% in Q1 2017 versus Q1 2016 on a like-for-like basis.

Tele2 said that a 3% rise in its customer base and an increase in the average spend per user, a key indicator that the Kazakh economy is improving, had driven up revenues. Tele2 owns a 49% stake in its joint venture with Altel, which has around 6.5m subscribers – a 22% market share.

“Although still competitive, the market continued to benefit from higher pricing levels. The JV continued to replace old products with new offerings that offer better support for ASPU growth over time,” Tele2 said in its statement.

Altel is owned by state-run Kazakhtelecom. The joint-venture with Tele2 is seen as a challenger brand to the more established Kcell, part-owned by Sweden’s Telia, and Beeline, the brand name operated by Russia’s Vimpelcom.

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(News report from Issue No. 326, published on April 28 2017)

Kcell posts upbeat economic assessment

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APRIL 26 2017 (The Conway Bulletin) — In an upbeat assessment of the Kazakh economy, Kcell CEO Arti Ots said that Q1 2017 had been a period of stabilisation for the mobile operator. Service revenue, an important indicator of a mobile operator’s health, still fell but only by 1.5% while overall revenue was flat. Operating margins, though fell to 37% in Q1 2017 compared to 42% in Q1 2016, showing just how competitive the sector is. A price war has dented margins in Kazakhstan’s mobile market. Telia is a major shareholder in Kcell although it has said it wants to sell out of Central Asia.

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(News report from Issue No. 326, published on April 28 2017)

Sweden’s Telia scraps deal to sell Tajik mobile network

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DUSHANBE, MARCH 31 2017 (The Conway Bulletin) — Telia, the Swedish telecoms company, accused Tajikistan’s government of effectively blocking the $39m sale of mobile unit Tcell to the Aga Khan, an accusation that will undermine Western business confidence in the country.

The Tajik government’s anti- monopoly agency failed to respond to a request to approve the Tcell deal before a deadline set by Telia, forcing it to void the sale of its 60% stake in the company to the Aga Khan Fund for Economic Development (AKFED).

In a statement, Emil Nilsson, head of the Eurasia region for Telia, said that the company had now written off the value of Tcell’s assets, which it put at $13m, although it was still looking for an alternative buyer.

“We have taken all relevant actions in trying to close the deal. The proposed buyer of our interest in Tcell, AKFED, is an established investor in the region with multiple companies in its current portfolio and a long history in Tcell,” he said. “We are now assessing alternative ownership solutions for Tcell.”

Neither the Tajik government nor the Aga Khan have commented.

Telia has been looking to sell its units in Central Asia and the South Caucasus after a corruption probe in 2012/3 discovered it had paid a bribe of several hundred million dollars five years earlier to Gulnara Karimova, daughter of Uzbekistan’s then president Islam Karimov, in exchange for market access. Karimov died last year and Ms Karimova has been under house arrest in Tashkent since 2014.

The corruption scandal tarnished Telia’s reputation in the region. Netherlands-based MTS and Norway’s Telenor were also mired in the bribe-paying controversy.

Afterwards, in a damming indictment for companies operating in the region, Telia said the business environment in Central Asia was too riddled through with corruption that reputational damage was inevitable. It was better, the company had concluded, to sell its stakes in Tcell, Kcell (Kazakhstan), Ucell (Uzbekistan), Azercell (Azerbaijan) and Geocell (Georgia) than to risk more reputational damage.

The Aga Khan already owned a 40% stake in Tcell and had agreed to buy Telia’s stake in September last year.

In January, though, Telia accused the Tajik government of trying to pressure it into paying an unmerited tax bill and in February it said it had asked the anti-monopoly unit for a meeting to discuss why it hadn’t yet approved the deal with the Aga Khan.

A Conway Bulletin correspondent in Dushanbe confirmed that the Tcell network was operating as normal.

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(News report from Issue No. 323, published on April 6 2017)

OnePlus to push out smartphone to Kazakhstan and Kyrgyzstan

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MARCH 17 2017 (The Conway Bulletin) — Chinese smartphone maker OnePlus has signed a deal with FSU-wide distributor Marvel to push its 3T model into the Kazakh and Kyrgyz markets, media reported. OnePlus has only been building smartphones since 2013 but it has already attracted rave reviews. The deal, which should push the 3T onto the shop floors of mobile handset retailers, reflects the prominence of China in Central Asia.

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(News report from Issue No. 322, published on March 27 2017)

Row hurts mobile users in Tajikistan

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MARCH 6 2017 (The Conway Bulletin) — Telecoms companies in Tajikistan have, according to local media, stopped taking payments via terminals because of a dispute over the commission that the terminal operators were charging. The row has meant that long queues of people waiting to top up their mobiles are snaking out of telecoms shops in Dushanbe and other cities.

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(News report from Issue No. 320, published on March 13 2017)