The Ministry of National Economy of Kazakhstan has included Mobile Telecom Service LLC in the list of entities slated for privatization before 2025. Mobile Telecom, which operates two mobile operators, Tele2 and Altel, is a subsidiary of Kazakhtelecom.
Privatization plan
A draft regulation prepared by the cabinet indicates that the direct sale of the operator should occur this year. This move was approved by the State Commission on the Issues of Modernization of the Economy of the Republic of Kazakhstan on January 20.
Rationale for privatization
According to an explanatory note accompanying the document, the privatization of Tele2 and Altel is deemed necessary to stimulate economic growth and attract additional resources required for the expansion of the production base and modernization of manufacturing.
Market monopoly and privatization
In the previous year, both the Agency for Protection and Development of Competition and the Ministry of Digital Development emphasized the need to sell one of the two operators controlled by Kazakhtelecom to a private entity. They proposed that Kazakhtelecom finalize the deal before 2024.
These agencies highlighted that the national communication operator has monopolized the fixed and mobile communication market with shares of 80% and 60%, respectively. Digital Minister Bagdat Musin mentioned in June that at least two investors had already evaluated the asset, although no specific deadlines or potential bidders were disclosed.
Current ownership
Currently, Kazakhtelecom is the sole shareholder of Mobile Telecom Service. The state-owned company also holds a 51% stake in Kcell, another mobile operator in Kazakhstan. Other shareholders include the owner of Jusan Bank, Galimzhan Yessenov (14.87%), Jusan Bank itself (9.08%), and the Unified Accumulative Pension Fund (7.06%).
Market speculations
Many market participants and analysts initially speculated that Kcell would be the first asset of Kazakhtelecom up for sale. In mid-January, Teniz Capital suggested that Ooredoo QSC from Qatar might be interested in purchasing the asset. However, due to moderate performance and a complex ownership structure, the chances of Kcell being transferred to the private sector shortly appear limited.
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