Tag Archives: telecoms

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)

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)