Tele2 announced a deal to combine its mobile business in Kazakhstan with that of state-owned Kazakhtelecom, so reducing the market to three players.
Tele2 and Altel, a Kazakhtelecom subsidiary, will together have more than 5.6 million subscribers, with a market share of approximately 22 per cent, creating the third largest player, behind TeliaSonera-backed market leader KCell and Vimpelcom subsidiary Beeline.
In a statement, Tele2 said the agreement will bring both companies closer to a shared ambition to “create a stronger player” in the Kazakh market, as they look to leverage Altel’s continued 4G rollout as part of the deal.
Tele2 said it has built up a “successful” business in Kazakhstan over the course of six years, with the market showing encouraging signs in the company’s Q3 results, where it reported a 36 per cent growth in mobile end service revenue, amounting to SEK348 million ($40.6 million), as well as a customer net intake of 166,000.
As part of the same transaction, Tele2 will also acquire the 49 per cent stake in Tele2 Kazakhstan currently held by Asianet Holding. It will make an upfront payment of SEK128 million, as well as a “future earn out equivalent to an 18 per cent economic interest of the JV”.
Tele2 will therefore hold a fully diluted economic interest of 31 per cent taking into account Asianet’s earn out.
Allison Kirkby, president and CEO of Tele2, said the agreement will enable its customers to gain access to Altel’s 4G network, and “benefit from its accelerated rollout across Kazakhstan”.
“Both consumers and shareholders will benefit from the synergies generated by the joint venture,” she added.
The joint venture will be owned by a holding company in the Netherlands, in which Tele2 and Kazakhtelecom will have respectively 51 and 49 per cent of the voting rights and 49 and 51 per cent economic interest. Tele2 will take management control of the new joint venture.