Page 14 - bne_Tech_07_2020

Telecom
July 2020 www.intellinews.com I Page 14
Fitch ratings upgrades Kazakhtelecom’s long term IDR to ‘BBB-’ with stable outlook
Fitch Ratings has upgraded Kazakh state-run telecoms operator Kazakhtelecom’s (Kaztel’s) long-term issuer default rating (IDR) to 'BBB-' from 'BB+' with a stable outlook, it said in
a statement.
“The upgrade reflects the company's strengthened market position after the acquisition of a 75% stake in Kcell at end-2018 and a remaining 49% stake in the joint venture with Tele2 in mid-2019,” the ratings agency said, adding that the upgrade also reflected a strong financial performance, stabilisation of leverage and improved liquidity position.
Kaztel is a diversified telecom services provider in Kazakhstan with leading positions in broadband, mobile and pay-TV. The company assesses its market share at around 90% in fixed-line, 85% in fixed broadband, 61% in mobile and 42% in pay- TV services. Majority state ownership enables Kaztel to function as a preferred provider of telecom services to government entities and municipalities.
Kaztel owns most of its network infrastructure, including its fibre backbone network. As Kazakhstan's territory is comparable in size to that of western Europe, it is less-cost efficient for other market participants to completely duplicate its telecom infrastructure in the country of 19mn people.
Fitch expected Kaztel's capex to stand at around 22% of revenue in 2020. The high capex intensity is driven by some deferred capex from 2019 in the mobile segment, continued roll-out of the telco's fibre network to rural areas and investments in new government initiatives.
“Kaztel is in the process of integrating the two mobile acquisitions and synergy realisation
is under way. The synergies result from a significant reliance of both mobile subsidiaries on Kaztel's backbone infrastructure. Kaztel's Fitch-defined EBITDA margin is expected to increase to 39% in 2020 from 37% in 2019
and then gradually improve further to 41% by 2023,” the statement from the ratings agency said. “Further integration of the networks of
its mobile subsidiaries should result in further capex savings. The bundling of fixed and mobile services gives Kaztel and its mobile subsidiaries a better competitive position and should result in lower churn and better revenue growth.”
Kaztel's ratings are mainly driven by the company's dominant market positions in both fixed-line and mobile segments, robust free cash flow (FCF) generation, moderate leverage and
a benign regulatory environment.
GET THE BEST CONTENT DELIVERED STRAIGHT INTO YOUR INBOX!
bne:Tech
SIGN UP HERE