Tele2 Group has announced plans to combine its mobile operations in Kazakhstan with those of state-owned Kazakhtelecom (KT), in a move which would reduce the number of players in the market from four to three. Tele2 Kazakhstan is the country’s third largest cellco, while KT’s wireless unit Altel is the smallest of the four operators; they compete against market leader K’cell, which is backed by TeliaSonera, and Vimpelcom subsidiary KaR-Tel, which trades as Beeline. The combined business would retain third spot in the mobile sector, with more than 5.6 million subscribers and a market share of around 22%.
Under the agreement, both operating entities will be owned via a joint venture (JV) holding company incorporated in the Netherlands. Tele2 Group and Kazakhtelecom will have, respectively, 51% and 49% of the voting rights and a 49% and 51% economic interest in the JV, with Sweden-based Tele2 Group retaining management control. As part of the transaction, Tele2 Group will purchase Asianet’s existing 49% stake in Tele2 Kazakhstan for an upfront consideration of SEK128 million (USD15 million) and a future earn out equivalent to an 18% economic interest of the joint venture. This would give Tele2 a fully diluted economic interest of 31%, taking into account Asianet’s 18% earn out.
Allison Kirkby, President and CEO of Tele2 Group, commented: ‘This transaction will enable our customers to gain access to Altel’s 4G network and to benefit from its accelerated rollout across Kazakhstan. As a result, both consumers and shareholders will benefit from the synergies generated by the Joint Venture.’