Tele2 Kazakhstan and Kazakhtelecom this week agreed to combine their mobile operations into a new joint venture, reducing the number of players in the market to three from four.
Tele2 Kazakhstan and Kazakhtelecom’s mobile subsidiary Altel are the third and fourth-largest players respectively in the country when it comes to subscribers.
The combined entity will have 5.6 million customers, giving it a market share of around 22%, the companies said. That still leaves it in third place behind TeliaSonera-owned market leader Kcell, which has 10.8 million customers, and Vimpelcom’s Beeline unit, which has 9.7 million.
Nevertheless, forming a joint venture will enable the companies to mount a stronger challenge.
"The 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," said Tele2 CEO Allison Kirkby, in a statement on Wednesday.
Tele2 will own 49% of the joint venture’s equity, while Kazakhtelecom will own the remaining 51%.
However, Tele2 and Kazakhtelecom will hold 51% and 49% of the voting rights respectively. Tele2 will have operational control of the joint venture and the right to appoint the management board – apart from the CFO – and the board of directors including the chairman.
"As a result of this deal new opportunities, related to expanding the network coverage, will emerge. The partnership will also boost the use of advanced technologies such as 4G LTE and expand the range of services available for customers of Altel and Tele2 Kazakhstan," said Kazakhtelecom chairman Kuanyshbek Yesekeyev.
