Kcell

Kcell JSC is one of the mobile operators in Kazakhstan that supports GSM, UMTS/WCDMA, LTE (4G) and LTE Advanced standards. The company serves almost half of the country's population, with more than 8 million subscribers. In the market, the operator operates under the Kcell and Activ brands, the first of which is aimed at a business audience, and the second at the B2C segment.

Services

Kcell provides mobile voice services, short message services, supplementary services (VAS) such as multimedia messaging, access to mobile content, as well as data services, including Internet access. The company is represented on the market by two brands: Kcell, whose target audience is corporate clients (including government agencies) and Activ, which is aimed at mass market subscribers. The company provides services through its extensive high-quality mobile communication network, which covers almost the entire territory of the Republic of Kazakhstan.

In the future, the company plans to continue investing in the development of its 3G/4G network to expand network coverage and provide high-quality communication services. Kcell is committed to maintaining high standards of service delivery in the mobile market by offering its products and services at competitive prices, expanding its range of products and services, maintaining the quality of its network and increasing the value of its brand.

History

2024

The composition of shareholders has changed. Structure

On September 11, 2024, Kcell, one of the major mobile operators in the telecommunications market in Kazakhstan, announced a change in the composition of shareholders. The list of owners of large shares includes a private company KC Holding Ltd.

The changes affected the composition of shareholders holding 10% or more of the company's voting shares. Kazakhstani businessman Galimzhan Yesenov, chairman of the board of directors of Susan Bank, founder of the scientific and educational foundation named after Academician Shakhmardan Yesenov. It is said that the transaction was made in order to optimize the structure of ownership of shares within the Esenov group of companies, the final owner of the shares remained the same, the number of shares did not change (29,745,215 common shares of Kcell JSC).

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Forbes.kz

Information on the amount of the transaction at the time of its execution was not disclosed. The changes are not expected to have an impact on the company's operations. As of September 11, 2024, Kcell's shareholder mix is as follows:

· "Kazakhtelecom" - a share of 51%;

· KC Holding Ltd. — 14,87%;

· Jusan Bank — 9,08%;

· Unified Accumulative Pension Fund - 7.07%;

· Shares in free float - 17.98%.

It is noted that Esenov became the owner of a 14.87 percent stake in Kcell at the end of July 2023 instead of the previous owner - Pioneer Technologies S.A.R.L. registered in Luxembourg. This company, in turn, acquired the stake at the end of September 2021 at KASE from Kazakhtelecom. According to Forbes, in the ranking of 75 richest businessmen in Kazakhstan from 2024, Esenov takes 15th place with a fortune of $590 million. The businessman owns 99.74% of First Heartland Securities JSC, through which he controls 79.63% of First Heartland Susan Bank JSC, and another 20.11% of the bank belongs to him directly.^[1]

Askar Zhambakin - new CEO

In July 2024, Askar Zhambakin headed the telecommunications company Kcell, replacing Askhat Uzbekistan, who led the telecom operator for more than two years. Read more here.

Kcell for the first time became more expensive than Kazakhtelecom

According to the results of the first quarter of 2024, the capitalization of the cellular operator Kcell increased from 407.5 billion to 627.4 billion tenge (about $1.3 billion at the exchange rate as of August 23, 2024). Thus, Kcell for the first time became more expensive than its parent structure - Kazakhtelecom.

It is noted that in the period from January to March 2024, Kcell shares rose in price by 61.9%. As a result, the operator entered the Top 5 most expensive companies of the Kazakhstan Stock Exchange (KASE) index list, and the shares of large shareholders rose significantly. In particular, Kazakhtelecom owns a 51% stake in Kcell: the value of this asset during the quarter increased by 123.5 billion tenge - from 200 billion to 323 billion tenge ($0.67 billion).

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Bloomberg

The Association of Financiers of Kazakhstan believes that one of the key factors contributing to the growth of Kcell's value is an improvement in financial indicators - an increase in quarterly revenue and expectations of profit growth amid the deployment of the 5G network. At the same time, the head of Eurasian Capital Askar Aitkozha named several growth factors in Kcell shares. Among them are high expectations for dividends and a rise in price amid rumors of a possible sale of Kcell (this information was not subsequently confirmed, and instead of Kcell, it was decided to sell the Tele2/Altel to a foreign investor).

Halyk Finance analyst Aydin Seitzhapbar adds that as of August 2024, only Kcell and Mobile Telecom-Service LLP (Tele2/Altel) operate 5G networks in Kazakhstan. After the sale of the latter by Kazakhtelecom, cooperation between mobile operators may change significantly. In particular, competition between companies will increase, especially in the context of the development of 5G infrastructure. And this may lead to changes in the tariff policy^[2]

2022: Askhat Uzbekov - new CEO

In May 2022, Askhat Uzekov was appointed Chief Executive Officer of Kcell JSC. He was also elected chairman of the company's board. Read more here.

2021

Kazakhtelecom sold a 24% stake in Kcell on the stock exchange. 9% acquired the fund of ex-President Nursultan Nazarbayev

The main fixed-line operator of Kazakhstan, Kazakhtelecom, in October 2021 announced the sale of its 24% stake in the country's largest mobile operator Kcell. The sale took place on the Kazakhstan Stock Exchange. Kazakhtelecom remains the owner of 51% of Kcell. Kazakhtelecom itself is controlled by the state.

"The transaction on the sale of a 24% stake in Kcell will allow raising long-term capital for the development of the Kazakhtelecom group of companies, increase its market value and profitability, create additional conditions for the investment activity of the Kazakhtelecom group of companies, as well as partially reduce the shares of subjects of the quasi-public sector in the economy and positively affect the stock market of Kazakhstan, which should be positively received by the market and society, "Kazakhtelecom said in a statement.

Trading in Kcell shares on the Kazakhstan Stock Exchange ended at 1.342 tenge ($3.15) per share. Based on this estimate, the entire package sold was supposed to cost 42 billion tenge ($150 million).

At the same time, it became known that Kazakhstan's First Heartland Susan Bank (part of the Susan group) acquired 9% of Kcell shares at open trading on the Kazakhstan Stock Exchange. According to Aibek Kayypov, Chairman of the Bank's Board, the acquisition of Kcell shares is in line with the strategy of the financial group of companies Susan aimed at developing high-tech platforms.

At this time, the Susan group is actively buying up assets: recently the group acquired Kazakhstan's ATF Bank, and in Russia the group acquired the Asia-Pacific Bank, which has undergone reorganization. The Susan group is controlled by structures associated with the first president and lifelong Leader of the Nation of Kazakhstan Nursultan Nazarbayev: Nazarbayev Foundation, Nazarbayev University and Nazarbayev Intellectual Schools. The head of the Nazarbayev Foundation is the eldest daughter of ex-president of the republic Dariga Nazarbayev.

The press service of Kazakhtelecom told Interfax that the stake in Kcell acquired by First Heartland Susan Bank was part of the stake in Kazakhtelecom sold on the stock exchange.

Appointment of Yuri Kharlamov to the position of Chief Executive Officer

On January 3, 2021, Yuri Kharlamov began performing the duties of the chief executive officer of Kcell, replacing Kaspars Kukelis, who led the mobile operator for about two years. The corresponding decision was approved by the board of directors on December 18, 2020. Read more here.

2020

Connection to the Sberbank payment system

On June 11, 2020, Sberbank announced the connection of all mobile operators of the Republic of Kazakhstan to its payment system. Read more here.

Mobile operators of Kazakhstan agreed to share the network

In May 2020, the largest mobile operators Kazakhstan in agreed to share the network. The cooperation agreement was concluded by JSC "" Kcell(Activ and Kcell), LLP) Beeline and LLP. Mobile TelecomService (Tele2) More. here

2018

Kazakhtelecom buys 75% of Kcell voting shares

On December 12, 2018, it became known that an agreement was signed in Astana between Kazakhtelecom JSC and Telia Company and Fintur Holdings BV on the acquisition of 75% of the voting shares of Kcell JSC.

Participants of the transaction - Kazakhtelecom JSC, Telia Company and Fintur Holdings BV signed an agreement on the acquisition by Kazakhtelecom of a total 75 percent stake in the Kazakh telecommunications operator Kcell JSC. As of December 2018, as part of the transaction, Kazakhtelecom acquires a 24% stake in Kcell from Telia Company and a 51% stake in Fintur Holdings BV (a joint venture of Telia Company telecommunications companies (58.55%) and Turkcell (41.45%), respectively.

In preparation for the transaction, Kazakhtelecom conducted an investment analysis, assessment and comprehensive verification of the results of Kcell's financial and economic activities in accordance with international standards for transactions of this kind. The decision to acquire a 75% stake in Kcell was made by the Board of Directors of Kazakhtelecom JSC and the Investment and Strategic Committee of Samruk- Қazyna JSC.

It is expected that the acquisition of a controlling stake in Kcell will have a positive effect on the shareholder value of Kazakhtelecom JSC, and will also serve the further development of the telecommunications industry in Kazakhstan as a whole, including by expanding the spectrum and quality of modern telecommunications services offered to the population of the republic.

As of December 2018, Kazakhtelecom intends to build an integrated network on the territory of Kazakhstan that allows providing mobile and fixed communication services with high quality. This transaction is of strategic importance for us, including allowing us to start implementing a number of projects by optimizing and integrating networks. We also intend to promote the development of services while maintaining the main activities of Kcell and ensure the quality of service for all customers, which will give an additional impetus to the development of both Kazakhtelecom and Kcell, and increase their investment attractiveness. I would like to note that the Antimonopoly Authority has established a number of requirements and conditions in the interests of consumers and the development of the industry as a whole and we are certainly ready to comply with all the requirements of the regulator in accordance with the law. Kuanyshbek Yesekeev, Chairman of the Management Board of Kazakhtelecom JSC

The transaction will allow Kazakhtelecom JSC to significantly expand its presence in the mobile communications market in accordance with the company's long-term development strategy.

In turn, as noted by the President and CEO of Telia Johan Dennelind, this transaction is another important step to exit the Eurasian market and focus on the Northern and Baltic regions as part of the company's strategy. This is the sixth deal in the region since 2015.

Antimonopoly Authority of Kazakhstan approves deal to acquire 75% of Kcell shares by Kazakhtelecom

The Committee for Regulation of Natural Monopolies, Protection of Competition and Consumer Rights of the Ministry of National Economy of Kazakhstan considered the petition of Kazakhtelecom JSC to acquire 75% of the voting shares of the cellular operator Kcell, the press service of the ministry said.

According to the conclusions of experts^[3]Kazakhtelecom^[4] and Mobile Telkom-Service LLP, representing the Altel and Tele2 brands on the market, are not included in the same group of persons, since the controlling stake (50.52%) in this partnership belongs to the Swedish company Tele2 AB. Thus, given that Kazakhtelecom JSC does not have a market share in the cellular services market, the Antimonopoly Authority provided consent to the economic concentration consisting in the acquisition by Kazakhtelecom of 75% of the voting shares of Kcell JSC, a press release said in July 2018.

With the positive outcome of this transaction, Kazakhtelecom JSC will enter the country's cellular market. According to preliminary estimates, the company's share will be 37.5%.

Freedom Finance collects 10.5% of Kcell shares

The Russian investment company Freedom Finance"" consolidated 10.5% of the shares of the largest Kazakhstan mobile operator Kcell. Kcell said in a statement posted on the London Stock Exchange (LSE).

Judging by the quotes of Kcell shares on the LSE, the value of Freedom Finance's current stake in the securities of the mobile operator is $103 million. A representative of Freedom Finance declined to comment on the CNews purchase.

Freedom Finance provides services for organizing trading on American and European stock exchanges. The company is also engaged in brokerage and trust management of securities. Including Freedom Finance is an active participant in the stock market of Kazakhstan (in addition to LSE, Kcell shares are listed on the Kazakhstan Stock Exchange).

Kcell's main shareholder is Sweden's Telia. 24% of Kcell shares are owned directly by the Swedes. Another 51% of the shares of the mobile operator belong to the FinTur holding, in which Telia has 58.55% of the shares, Turkish Turkcell - 41.5%.

2017: More than 10 million subscribers

As of December 31, 2017, the operator's subscriber base was more than 10 million people. The company provides communication services in GSM, UMTS/WCDMA, LTE (4G), LTE Advanced standards. 4G/LTE services cover 49% of the country's population. The company also provides access to entertainment OTT services, the users of which in 2017 became more than half a million subscribers.

2015: Capitalization $1.6 billion

• As of May 6, 2015, according to the Kazakhstan Stock Exchange, the capitalization of Kcell JSC is $1.6 billion^[5].
• The company's revenue in 2014 reached 189.1 billion tenge ($1.03 billion), which is 0.8% higher than in 2013.
• EBITDA margin increased from 55.8% in 2013 to 56.1% in 2014. Net profit of the company in 2014 decreased by 8.1% compared to 2013 and amounted to 58.2 billion tenge ($317 million).

As of May 6, 2015, the main shareholders of the operator:

• Sonera Holding B.V. (Rotterdam, Kingdom of the Netherlands) - 24% of the shares,
• closed partnership Fintur Holdings B.V. (Rotterdam, Kingdom of the Netherlands) - 51% of the shares. Fintur Holdings is majority owned (74%) by TeliaSonera.

2014: Company management resigns after supplier scandal

The largest Kazakhstan mobile operator Kcell announced in September 2014 the resignation of its financial director Baurzhan Ayazbaev. The reasons for the resignation are not named, but it is known that the operator's board of directors began to search for a new CFO. Earlier, on September 30, its CEO, Turkish citizen Ali Agan, graduated from Kcell. Agan announced his intention to leave the board of directors in mid-September 2014^[6]

The board of directors is also looking for a new CEO for the operator. Its technical director, Rikard Slunga, has been appointed acting head of Kcell.

In parallel, Kcell announced the start of an internal investigation. This happened after Kcell's board of directors found violations of corporate procedures committed by the company when concluding contracts with external suppliers. To conduct the investigation, the board of directors allocated additional resources, in addition, specialists in English and Kazakh law will be involved in the investigation. What kind of violations were committed are not disclosed in Kcell and its controlling shareholder - the Swedish-Finnish TeliaSonera.

2013: Subscriber base - 11.6 million people

At the beginning of 2013, the company's subscriber base is 11.6 million people. As of June 2012, cellular communications provided by the company are available in 4979 cities and towns of Kazakhstan. The company provides cellular communication to all villages with a population of 5,000 or more.

2012: Renaming as JSC "Kcell"

On August 27, 2012, it became known that by the decision of the General Meeting, GSM LLP (G ES Em) Kazakhstan OJSC Kazakhtelecom was reorganized into a joint-stock company by transforming the organizational and legal form of a limited liability partnership. The name of the Company - GSM LLP (G ES Em) Kazakhstan OJSC Kazakhtelecom - has been changed to Kcell Joint Stock Company. Joint Stock Company "Kcell" is the legal successor of GSM LLP (G ES Em) Kazakhstan OJSC "Kazakhtelecom." Thus, all the rights and obligations of the reorganized GSM LLP (G ES Em) Kazakhstan OJSC "Kazakhtelecom" passed to the newly emerged legal entity - Joint Stock Company "Kcell."

2011: Turkcell shareholder allegations

At the end of March 2011, the Turkish operator Turkcell initiated an investigation into the GSM-Kazakhstan company ^[7]

49% of the shares of the Kazakh operator are owned by Kazakhtelecom, 51% by FinTur holding, in which, in turn, 58.55% of the shares belong to the Swedish-Finnish TeliaSonera. Turkcell owns the rest of the papers. The investigation was launched at the request of FinTur board members representing Turkcell.

What exactly caused the investigation, Turkcell does not disclose, noting only that the company confirms the information circulated in the Turkish media about GSM-Kazakhstan. A little earlier, a source in the Turkish group Cukurova, which controls Turkcell, told Today's Zaman that TeliaSonera is suspected of withdrawing millions of dollars from the Kazakh operator.

"Every time we asked why GSM-Kazakhstan does not pay dividends, we were told that the company is overdue," says a source at Cukurova. "Now we realized that the money was stolen by falsifying payments: the company paid Swedish supplier Ericsson for services that did not turn out."

Ericsson assures that the company's headquarters has already managed to verify the allegations. "The accusations expressed regarding our business with GSM-Kazakhstan are more than serious, so Ericsson conducted a special internal investigation, but no facts confirming the allegations were revealed," says Ericsson's director of public relations in Russia and the CIS countries Sergey Skripnikov. "Illegal or unethical business practices are unacceptable to us. All our employees and business partners always sign a special code of ethics, in which they undertake to follow all our corporate standards, including regarding non-corruption. "

Allegations of corruption against the Scandinavians were a response to Cukurova in the struggle for control of Turkcell, which TeliaSonera, together with the Russian holding Altimo, is trying to take away from the Turkish group.

51% of Turkcell shares belong to the "paper" structure of Turkcell Holding, 47% of which is owned by TeliaSonera (in addition, the Scandinavians own 15% of Turkcell shares directly), 53% - Cukurova Telecom Holding (CTH). In this structure, 49% belong to Altimo, 51% to Cukurova, which allows the Turkish group to control Turkcell. TeliaSonera and Altimo are simultaneously conducting litigation with Cukurova regarding the CTH controlling stake.

Shortly before that, Russians and Scandinavians opened a new "front," demanding the resignation of the chairman of the board of directors of Turkcell Colin Williams. Now there are two representatives from Cukurova, TeliaSonera and Altimo on the operator's board of directors, as well as one independent director - Williams. However, TeliaSonera and Altimo are together demanding the departure of Williams, considering him a protege of Cukurova, and the introduction of three independent directors to the board.

1998: Creation of GSM-Kazakhstan

GSM-Kazakhstan was founded in 1998, and already in February 1999 began to provide cellular services under the Kcell brand name, in September of the same year the Activ cellular brand was launched on the market.

Social responsibility

Over the years, Kcell has been implementing the principles of social responsibility, building a role model of socially responsible business in Kazakhstan. Therefore, the company initiates and supports many socially significant projects. Every year it supports about 50 social programs, and the total investment in the social sphere for the entire duration of the company's work in early 2013 exceeded 2 billion tenge.

Notes