* Biggest Kazakh mobile operator to list in London, Almaty
* IPO to be completed by year-end - Kcell CEO
* Previous transaction indicates $775 mln could be raised
* Listing set to compete with MegaFon IPO
By Robin Paxton
ALMATY, Nov 13 (Reuters) - Nordic telecoms group TeliaSonera plans to sell 25 percent of Kcell, the largest mobile operator in Kazakhstan, in a stock market float that could raise around $775 million, based on the price paid by TeliaSonera for its stake.
Kcell plans to complete an initial public offering in London and Almaty by the end of this year, Chief Executive Veysel Aral said on Tuesday. He declined to estimate the value of the stake.
TeliaSonera paid $1.52 billion in February to Kazakhtelecom, the largest fixed-line operator in Kazakhstan, for a 49 percent stake in Kcell. Based on this price, Kcell would be worth $3.1 billion and a 25 percent stake in the firm around $775 million.
"All the former calculations are rough estimations based on the price paid by TeliaSonera to Kazakhtelecom," Aral said in a telephone interview. "We'll have to see how the capital markets react."
Kcell's offering is likely to compete for investor attention with MegaFon, Russia's second-biggest mobile operator, which aims to raise $2 billion in a London IPO by the end of the year.
Aral, who spent 15 years at Ericsson before joining Kcell as chief executive in 2007, said the timing was a "coincidence". TeliaSonera first announced plans to float 25 percent of Kcell when agreeing to buy the Kazakhtelecom stake.
"I'm so busy that I don't have time to focus on what MegaFon is doing," he said. "If people are investing in Facebook, why wouldn't they invest in telecommunications?"
The European market for new listings has seen a pick up in recent weeks after months of inactivity, with British insurer Direct Line and Germany's Talanx among those whose shares have risen on stock market debuts.
Kcell, whose distinctive purple logo appears on billboards and store fronts around Almaty, Kazakhstan's commercial capital, has 12.7 million subscribers in the ex-Soviet republic, giving it a market share of nearly 48 percent.
The company generated revenues of $1.19 billion last year and net profit of $446 million. The EBITDA margin was 59.2 percent. In the first nine months of this year, revenue was $888 million, net profit $307 million and EBITDA margin 56.0 percent.
"Our board of directors adopted a decision to pay out a minimum 70 percent of our net income as dividends," Aral said. The payout on second-half 2012 net profit will be 100 percent.
EMERGING MARKETS GROWTH
While the European telecom index was down about 6.3 percent to-date this year, emerging market-focused telecoms companies have fared better.
New-York listed Russian providers Vimpelcom and MTS have seen their shares rise by around 9 percent and 11 percent respectively since the start of the year.
With mobile penetration in Central Asia's largest economy already at 158 percent, Aral said Kcell - without any plans to expand beyond Kazakhstan - planned to increase smartphone and broadband use, as well as time spent online by its subscribers.
He said smartphone penetration in Kazakhstan was less than 10 percent, compared with nearer 20 percent in Russia, while Kazakh subscribers averaged 180 minutes of usage per month, less than half of the comparative figure for Russia.
"If you compare these basic figures in the data segment, you will easily see that there is a big opportunity," he said.
Kcell executives will embark on a three to four-week roadshow, taking in Moscow, Abu Dhabi, New York, Boston and several western European cities, as well as Almaty and London.
A source familiar with the matter said they planned to complete the IPO before Christmas, Dec. 25.
Credit Suisse, UBS and Kazakh investment bank Visor Capital have been appointed joint global coordinators and joint bookrunners. Renaissance Capital is acting as a joint bookrunner and Halyk Finance co-manager of the global offer.
TeliaSonera, formed by a merger of the former monopolies of Sweden and Finland, has said it plans to pay down debt with proceeds from the Kcell IPO.
Analysts have said the company could also pay a one-off dividend after raising money from the Megafon IPO - it has a 35.6 percent stake in the Russian company - and the possible sale of Spanish unit Yoigo.
Stagnation in Nordic and Baltic markets has seen TeliaSonera increase its focus on emerging markets, a strategy that has prompted some of its shareholders to suggest the possible spin-off of its emerging markets interests into a separate company.
Swedish prosecutors launched a preliminary investigation in September into allegations of bribery and money laundering related to the company's purchase of a 3G licence in Uzbekistan in 2007. TeliaSonera has denied any wrongdoing.
Lars Nyberg, president and chief executive, said in a statement that Kcell was one of TeliaSonera's most successful subsidiaries and that the company was "fully committed" to it.
Its stake in Kcell will drop to 61.9 percent after the IPO: 24 percent held directly and 37.9 percent through Fintur Holdings, a joint venture with Turkey's Turkcell that owns 51 percent of Kcell.