KCell Today

Kcell Joint Stock Company (further - Kcell or the Company) is the leading provider of cellular communication services in Kazakhstan by market share and in terms of revenue and subscribers. The Company succeeded in defending and retaining its leading market position in spite of changes in the competitive environment.

Kcell has 13.5 million subscribers in Kazakhstan at the end of 2012, representing approximately 47% of the country’s total subscriber base. Kcell’s consistently high market share in terms of revenue – 54.5% - demonstrates the high quality of services provided by the Company.

Kcell renders communication services, including cellular services, such as voice calls and SMS, auxiliary cellular services, such as MMS, data transfer services, Internet access, as well as provides subscribers with free access to emergency medical, law enforcement, fire, emergency, information and other services, approved by the Government of the Republic of Kazakhstan. The Company has two brands: Kcell, which targets the premium market (including corporate and government clients), and Activ, which targets the mass market. These brands are the strongest in the Kazakhstani mobile market and are ahead of competitors in customer satisfaction, according to research of Extended Performance Satisfaction Index (EPSI Rating) conducted in 2011 and 2012. The Company provides service through an extensive, high quality network that covers almost the entire populated territory of Kazakhstan.

Kcell possesses a number of unique characteristics and is a profitable target for investment:

  • Leading operator in Kazakhstan
  • Superior network
  • Customer-centric approach with a strong local brand and extensive distribution network
  • Strategic relationship with TeliaSonera
  • International management experience
  • Well positioned to capture growth in data transmission services
  • High profitability and effective capital management that ensure cash flow
  • Stable macroeconomic situation in Kazakhstan

Kcell and TeliaSonera

Kcell is part of TeliaSonera, the largest Nordic telecommunications company. TeliaSonera has existed since 1853 from Swedish Royal Telegraph Company and is a pioneer in the telecommunications industry, one of the inventors of mobile communications, and the creator of the GSM standard. TeliaSonera provides telecommunication services and network access to help people and companies communicate simply and effectively.

The holding has evolved from separate local operators into the fifth-largest telecommunications group in Europe. TeliaSonera continues to invest in high-quality networks to meet growing demand for services and data transfer, and together with its partners and suppliers offers its clients access to the best solutions. TeliaSonera Group has more than 27,8 thousand employees around the world. In 2012, the groups’ sales reached 104,9 billion Swedish kronor (about U.S. $16.2 billion), EBITDA amounts 36.1 billion Swedish kronor (U.S. $5.6 billion). TeliaSonera shares are listed on the NASDAQ OMX, Stockholm and Helsinki stock exchanges.

As a part of the group, Kcell enjoys unique benefits of strategic leadership from TeliaSonera. For example, in 2011 the company became a participant of a global re-branding campaign, which led to the creation of a single brand image for 18 different TeliaSonera brands. Every Kcell subscriber now knows he is being served not only by a local operator, but by the international telecommunications holding TeliaSonera, with the corresponding quality of service. The company is also able to cut costs by participating in other TeliaSonera initiatives, such as the international roaming program, through which TeliaSonera group companies offer intra-group discounts on roaming and common end-user pricing, and the joint technology initiative, which includes common procurement across the TeliaSonera group. Kcell also develops its internal policies and guidelines in cooperation with TeliaSonera, including in the area of corporate governance and corporate responsibility.

The History of Kcell

Kcell is a subsidiary of Fintur Holdings B.V., which designs, constructs and operates a cellular telecommunications network on the GSM standard in the Republic of Kazakhstan. The company was formed as a limited liability company оn June 1, 1998, under the short name GSM Kazakhstan OJSC "Kazakhtelecom" LLP. Until February 2, 2012, Fintur Holdings B.V. owned 51% of the Company's capital, with the remaining 49% belonging to Kazakhtelecom JSC. The owners of Fintur Holdings B.V. are TeliaSonera Finland Oyj and Turkcell Iletisim Hizmetleri AS; they hold, respectively, 58.55% and 41.45% of shares. On February 2, 2012, the 49% share owned by Kazakhtelecom JSC was sold to Sonera Holding B.V., an entity which is under the control of TeliaSonera. On July 1, 2012, a General Meeting of Participants for GSM Kazakhstan OJSC "Kazakhtelecom" LLP approved the conversion of the Company from a limited liability company into a joint stock company with 200 million common shares, to be transferred to Fintur and Sonera proportionally to their ownership percentage. The meeting also approved the change of the Company’s name to Kcell JSC. On August 27, 2012, the Ministry of Justice registered the Company as a joint stock company.

On December 13, 2012, Kcell successfully listed its GDRs on the London Stock Exchange and its common shares on the Kazakhstan Stock Exchange. The listing was a sale by TeliaSonera of 50 million shares, which constituted 25% of the Company’s share capital. IPO was done due to the conditions of the agreement with Kazakhtelecom and Government aimed to develop Kazakhstani capital market.