Sweden’s Tele2 and Kazakhtelecom have completed their mobile joint venture deal in Kazakhstan, creating a more robust player with some six million customers, equal to a market share of about 23%.
Sweden’s Tele2 (STO:TEL2) and Kazakhtelecom (KASE:KZTK) have completed their mobile joint venture deal in Kazakhstan, creating a more robust player with some six million customers, equal to a market share of about 23%.
The companies first announced the JV, which will be incorporated in the Netherlands, last November. It will house Tele2 Kazakhstan’s established mobile business and Kazakhtelecom’s mobile unit Altel – a smaller player holding the country’s only 4G licence – and reduce the number of MNOs from four to three.
VimpelCom’s Beeline unit and Kcell dominate the local market with a combined 78% market share. Yesterday, Turkcell announced that it had made a binding bid for TeliaSonera’s stake in their Eurasian JV Fintur, which includes Kcell, as well as for its 24% direct stake in Kcell.
Allison Kirkby (pictured), president and CEO of Tele2, which received advice from Ondra Partners on the deal, said combining Tele2 Kazakhstan and Altel “will create a more sustainable and significant player in the market”.
“The process of integrating the businesses is well underway and the expected synergies will be beneficial for both our customers and our shareholders.”
Back in November, Kirkby said Altel’s 4G network provided an opportunity to get ahead in data services and “benefit from its accelerated rollout across Kazakhstan”.
Tele2 will have management control of the JV, 51% of the voting rights and 49% of the equity, while Kazakhtelecom will have 49% of the voting rights and 51% of the equity.
Kazakhtelecom has a call option to buy Tele2’s shares after three years and Tele2 has a symmetrical put option.
A Tele2 spokesperson said in November that the put and call options create flexibility, providing multiple options for future scenarios.
“We have the possibility to exit after three years and although that is not our intention currently, we will, as always, look to maximise value for the business and our shareholders,” the spokesperson said.
The JV will adopt Tele2’s corporate governance standards, procedures and code of conduct, which Kazakhtelecom has committed to follow. Tele2 will appoint the entire management board, apart from the CFO, as well as half of the board of directors, including the chairman, who will hold the casting vote.
Tele2 added that it has reserved the right to exit the joint venture in the event that Kazakhtelecom breaches the code of conduct. The two partners’ relationship will be governed by the law of England and Wales.
