* 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 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
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
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
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.