Kazakhstan worries about risks associated with Kazakhtelecom’s success at 5G Bids

The Agency for Protection and Development of Competition of the Republic of Kazakhstan is worried about the win of Mobile Telecom Services and Kcell, Kazakhtelecom’s two subsidiaries, during bids over 5G frequencies. The agency says that these results carry the risks of monopoly and tariff increase, according to Rustam Akhmetov, first deputy head of the antimonopoly agency.

«We aren’t happy with the bid’s results. First of all, we see a growing risk of monopolization. There is no chance for any private operator to emerge in the market. Second, we have lost an opportunity to get private investments and now all future investments into the 5G network must be covered by the national company. Third, we can’t rule out that 5G implementation will be based on tariff increase,» Akhmetov said.

To prevent mobile services and internet tariffs from an unjustified increase, the antimonopoly agency is going to keep an eye on further actions of the mobile operators in the sphere of tariff policy,” the official added.

He confirmed that the agency has already shared with the Ministry of Digital, Innovations and Aerospace Industry its vision for how to improve upcoming bids for 5G frequencies. «We’ve sent these recommendations to our colleagues. Discussions are still in progress. I can’t provide more information,» Akhmetov said.

Digital Ministry is planning to make two more 5G frequencies available. The agency is going to sell them at the end of next year. Mobile Telecom Services and Kcell may not be allowed to take part in the bid because they have to focus on the development of those 5G frequencies they have already bought out.

«The fact that two subsidiaries of the same holding won the bid is very close to something we call monopoly. However, we are going to make two more frequencies available, and those companies that already have 5G bands won’t be able to participate in new auctions,» stated Vice Digital Minister Askhat Orazbek on December 26.

He hopes that in a year Beeline and other companies will join the process of the development of 5G in Kazakhstan.

According to Askhat Uzbekov, CEO of Kcell, tariffs for 5G aren’t any higher than tariffs for 4G, although the vast majority of clients may prefer 4G to save their account balance.

«It’s too early to talk about a tariff increase until we guarantee carpet coverage of all cities. The structure of mobile services consumption and their costs are going to change completely,» he said.

In December, the consortium of mobile operators Mobile Telecom Service (Tele2 and Altel brands) and Kcell (Kcell and Active brands), which are both controlled by Kazakhtelecom, won the 5G bid and paid about $339 million for 3600-3700 MHz and 3700-3800 MHz 5G frequencies. The two operators are planning to allocate an additional $335 million for the development of the 5G network.

It is expected that 5G will be available in Almaty, Astana and Shymkent by the end of the current year. The 5G network must be deployed in all regional centers by 2025.

In February 2022, President Kassym-Jomart Tokayev demanded the cabinet eliminate all artificial monopolies. In response, the Ministry of Digital Development suggested demonopolizing Kazakhtelecom by selling one of its mobile operators. In turn, Kazakhtelecom insists that it isn’t a monopoly, but rather a dominant player.