Kazakhtelecom to sell Tele2 by the end of this year

The Ministry of National Economy has added Mobile Telecom Service LLC to the list of entities that must be transferred to the private sector before 2025. Mobile Telecom runs two mobile operators, Tele2 and Altel, and belongs to Kazakhtelecom. The corresponding adjustments in the document were published on the legalacts.egov.kz website.

A draft regulation prepared by the cabinet suggests that the direct sale of the operator must happen this year as the State Commission on the Issues of Modernization of the Economy of the Republic of Kazakhstan approved the move on January 20.

According to an explanatory note to the document, the privatization of Tele2 and Altel is necessary due to «the need to stimulate economic growth and attract additional resources necessary for expansion of the production base and modernization of manufacturing.»

Last year, both the Agency for Protection and Development of Competition and the Ministry of Digital Development talked about the necessity of selling one of the two operators controlled by Kazakhtelecom to a private company. They even wanted Kazakhtelecom to close the deal before 2024. According to these agencies, the national communication operator has monopolized the market of fixed and mobile communication with market shares of 80% and 60%, respectively. No deadlines or possible bidders were disclosed, although Digital Minister Bagdat Musin mentioned in June that at least two investors already evaluated the asset.

So far, Kazakhtelecom is the sole shareholder of Mobile Telecom Service. The state-owned company also controls a 51% stake in Kcell, another mobile operator in Kazakhstan. Among its other shareholders are the owner of Jusan Bank Galimzhan Yessenov (14.87%), Jusan Bank itself (9.08%) and the Unified Accumulative Pension Fund (7.06%).

Interestingly, many market participants and analysts thought that Kcell would be the first asset of Kazakhtelecom for sale. In mid-January, Teniz Capital said that Ooredoo QSC from Qatar might be interested in purchasing the asset. However, moderate performance and a very complex ownership structure limit the chances of Kcell being transferred to the private sector anytime soon.