National Information Superhighway
National Information Superhighway
Kazakhtelecom JSC, the largest telecommunications company in Kazakhstan, established in 1994, occupies 93% of the fixed voice market (2.6 million subscribers), 61% of the mobile market (14.5 million subscribers), 74% of the broadband market (1.8 million), 33% of the segment pay TV (930,7 thousand subscribers) and 18% — in the market of ICT services.
Kazakhtelecom JSC owns the National Information Superhighway, which is a transport fiber-optic ring connecting large cities of Kazakhstan with digital streams with high data transfer rates. The company’s infrastructure includes more than 87 thousand km of fiber-optic network and more than 13 thousand base stations, which provides coverage of the entire territory of the country with fixed communications and 81% of the total population of the country with an LTE network. The infrastructure base of the group also includes 27 commercial data centers.
Key performance results
|
Indicator |
2021 |
2022 |
|
production indicators: |
||
|
number of fixed lines, thousand lines |
2774.5 |
2651.5 |
|
number of fixed BBA subscribers, thousand subscribers |
1860.7 |
1863.2 |
|
pay TV, thousand subscribers |
918.7 |
930.7 |
|
mobile subscribers, thousand subscribers |
14543.3 |
14548.9 |
|
financial indicators*: KZT billion |
||
|
revenue |
594.2 |
634.5 |
|
operating profit |
160.9 |
174.3 |
|
net profit |
90.8 |
128.8 |
|
dividends paid** |
22.0 |
39.5 |
|
net debt*** |
139.7 |
32.1 |
|
taxes paid |
89 |
118 |
* decrease in the indicator is due to the refusal of subscribers from landlines
** dividends accrued following 2020 and 2021 were paid in 2021 and 2022, respectively.
*** Net debt is calculated according to the consolidated financial statements, where: Debt – loans and lease obligations, Cash – cash and cash equivalents + Short-term financial assets measured at amortised cost.
Last year 2022, although it turned out to be difficult for the company, but in general it became quite productive for the national operator of the telecommunications market.
In Q1, during the tragic events of January, the company took unprecedented measures to support subscribers who tried to call relatives to make sure of their safety. Namely, by providing a 50% discount on the subscription fee for a number of services to individuals and businesses, canceling the penalty for late payments, and providing free long-distance phone calls for 1000 minutes to each subscriber.
Similar steps were taken in early September, when Kazakhtelecom JSC exempted residents and entrepreneurs of Auliyekol district of Kostanai region affected by large-scale forest fires from subscription fees for services.
At the same time, the company has allocated significant financial resources to improve the welfare of its employees. All these measures could not but affect financial indicators at the beginning and middle of the year, however, at the end of four quarters, Kazakhtelecom JSC managed to completely neutralize negative deviations and significantly improve the net income indicator.”
According to the consolidated financial statements, in 2022, Kazakhtelecom JSC group of companies showed growth in all major financial and economic indicators, despite the objective difficulties of last year.
Already in Q3 2022, Kazakhtelecom JSC’s net income directly exceeded KZT88 billion, having increased by 2.4% as compared to January – September 2021. (It is noteworthy that in H1 2022, the company showed 13% decrease in net income).
The consolidated revenue of the group companies in the same period increased by 9.8%, and the EBITDA margin remained at 46% throughout the year. Positive trends continued in Q4 2022.
The book value of the company’s ordinary shares, calculated according to requirements of Kazakhstan Stock Exchange JSC, has increased by almost 40% since December 31, 2021, amounting to more than KZT37 thousand.
Despite a fairly large amount of capital expenses, in 2022, the company maintained a comfortable level of liquidity: Kazakhtelecom JSC had a significant amount of cash both on the balance sheet and available for attraction under open credit facilities.
At the same time, Kazakhtelecom JSC was not exposed to currency risk, since all the company’s liabilities were denominated in KZT. These positive factors were also noted by the international rating agencies, S&P Global Ratings and Fitch Ratings, which in 2022 appraised the rating at the “Stable” level, forecasting further organic revenue growth and recognized a significant margin of financial stability of the companies group. The data of the consolidated financial statements for the companies group by the end of 2022, in particular, growth of income and net profit in the difficult conditions of 2022, fully confirm this assessment of international analysts.
Infrastructure Investments
The Kazakhtelecom JSC group of companies has been investing more than KZT100 billion annually in its long-term assets over the past years. At the same time, the volume of investments in the development and modernization of the network (construction of 5G networks, replacement of copper networks with “optics”, continuation of the construction of broadband access networks in urban and rural settlements, etc.) in 2021 increased by 40%, and by the end of 10 months of 2022 - by 17% (as compared to the same the period in 2021). Income, including from invested investments, also show growth: in 2021 by 13%, and by the end of 10 months of 2022 by 8% as compared to January-October 2021.
The company continues to continuously improve the quality and availability of communication services throughout Kazakhstan, planning even more significant investments in 2023. The share of capital expenses in income is about 20%. The share of receipt of new fixed assets from their residual value at the end of the period is about 20%. This shows that the company’s development process is continuous.
Dividend Payment
In 2022, Kazakhtelcom JSC (according to the decision of the Extraordinary General Meeting of Shareholders) allocated 43.53% of the consolidated retained income for 2021 - KZT39.5 billion to pay dividends.
For comparison, at the end of 2020, 30% of net income - KZT19.0 billion was allocated to pay dividends.
Social Partnership
The year 2022 was declared the year of social support for employees in the company. In the spring of 2022, Kazakhtelecom JSC adopted a new version of the collective agreement, which assumed increase in official salaries of employees (with an emphasis on workers of mass professions, including engineering and technical personnel) by an average of 20%.
In addition, 475 employees of Kazakhtelcom holding low-paid positions have their salaries increased on average from 4% to 20%.
In addition, various payments and support measures were provided: financial assistance for labor leave for recovery, social benefits for temporary disability, a one-time allowance for early retirement, payments in connection with the birth of a child and monetary assistance in cases when an employee found himself in a difficult life situation.
Thus, the company’s expenses on the payroll fund increased by 27% in 2022 as compared to the previous year - up to KZT95.5 billion.
Mobile communication
In the mobile communications market, Kazakhtelcom JSC group includes operators of Kcell JSC (Kcell and Activ brands) l and MT-C LLP (Altel and Tele2 brands).
In December last year, the consortium of operators of Kazakhtelecom JSC group of companies represented by MT-C LLP and Kcell JSC won the auction of radio frequencies for the fifth generation of mobile communications (5G) at the information system site “gosreestr.kz” for lot No. 1 in the 3600-3700 MHz (100 MHz) radio frequency bands and lot No.2 in the 3700-3800 MHz (100 MHz) radio frequency bands. According to terms of the competition, these companies must deploy more than 7 thousand 5G base stations throughout the country by 2027, of which 486 base stations in Astana, Almaty and Shymkent will be put into operation this year.
Despite the difficulties of the beginning of last year, Kcell has maintained positive dynamics due to the development of its own digital ecosystem, mobile financial services, B2B segment and retail sales of devices. In 2022, Kcell invested KZT41.6 billion, most of which was aimed at upgrading the network to improve the quality of communication.
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As part of the program to improve the quality of communication, equipment was installed and upgraded at 1,272 base stations and up to 40% increase in data transmission speed was recorded at locations where installation work took place. 604 sites8 (including partner sites) were launched in rural areas to provide the population with mobile broadband access. The company has provided new coverage and improved the network by upgrading and activating 246 base stations.
Last year Tele2 confirmed its leadership position by becoming the winner in the nomination “Fastest Mobile Internet Network” based on the results of tests of users of the Speedtest service from Ookla9.
8The site is the base station
9Ookla is a world leader in the field of intelligent analysis of mobile and broadband networks, application testing and related technologies. Speedtest is the Ookla's flagship network testing platform, receives and processes hundreds of millions of network performance and quality measurements around the world every day. Ookla trademarks are used under license and reprinted with permission.
In addition, Kazakhtelecom JSC contributes to the development of rural talents through access to high-speed Internet and, as a result, to social networks. The project was awarded the national award in the field of communications – Ak Mergen.
According to the analysis of non-personalized traffic in our network for 2022 in small villages - where the MBBA was connected under the 250+ program10 - the share of video services and social networks was almost 40%.
Plans for 2023
The positive results of 2022 permit the companies group to start work on a number of large and expensive projects this year. The priority is the launch of fifth–generation mobile communication networks in Kazakhstan.
According to the commitments made as a result of the auction, it is expected that by 2027 75% of cities of republican significance, 60% of regional centers will be provided with 5G technology.
FOL on the bottom of the Caspian Sea will connect the countries of Central Asia with a single Internet space
In 2023, Kazakhtelecom JSC will continue working on an international complex project for the construction of a fiber-optic line along the bottom of the Caspian Sea on the Azerbaijan–Kazakhstan route.
The main route will run from Aktau to the Azerbaijani district of Sumgait and will be more than 340 km, a reserve channel with a length of about 330 km will be laid from the Kazakh port of Kuryk to the district of Sumgait, which is not far from Baku.
The Trans-Caspian project is strategically important for Kazakhstan (and, in general, for the entire Central Asian region), because with its implementation, our country will receive additional access to the international transit market, which will ensure the transit of global traffic from Asian countries through Kazakhstan to Azerbaijan with access through Georgia, the Black Sea and Bulgaria to Europe.
The project will also serve as a driver for accelerating the creation of a new digital telecommunications corridor and will help to reach a higher level of development of high-speed and secure data transmission infrastructure, strengthening trade ties.
Closer to the Consumer
Kazakhtelecom JSC will also continue to carry out a large-scale transfer of Kazakhstan subscribers from outdated ADSL data transmission technologies to optics within the framework of the Network Deduplication program, which in 2023 will affect more than 25 thousand users in nine cities of the republic.
Also, the country’s largest telecom operator intends to install additional caching servers of global content providers Akamai, Facebook, Google, Cloudflare, Netflix, and Meta.
The undoubted competitive advantage of the company is a developed and powerful infrastructure, which includes more than 87 thousand kilometers of fiber-optic lines throughout the republic, more than 13 thousand base stations, 27 data processing centers and 40 thousand city video surveillance cameras. This infrastructure permits the companies group to render high-quality services to more than 1.8 million subscribers in the broadband access sector, over 14.9 million in the mobile communications segment and serve 913205 thousand pay-TV connection points
The year 2023 has been declared the “Year of Service and Customer Orientation” in the company. Six main goals for managing customer experience are formulated, in particular:
- achieving NPS-service satisfaction index 11%;
- achieving 90% of the indicators of solving consumer requests from the first request - FRR (First request resolution) – that is, 90% of all requests must be solved at the first attempt;
- achieving 63% of the eNPS staff satisfaction index;
- achieving 68% in the SRS Social Stability Index;
- achieving 90% of the implementation of GPON technology service installations in 24 hours;
- achieving 95% elimination of single damages in 12 hours.
In 2022, Kazakhtelecom JSC approved the Development Strategy of Kazakhtelecom JSC “JRun” for 2023-2032.
The two most important areas of the strategy are Jakyn - leadership in the telecom market by improving customer experience and Birlik - success by improving employee experience. Special attention in the strategy is focused on the client experience not only of the external, but also of the internal client.
Today, the service is the main differentiator in the service market. And that is why 2023 has been declared the year of service quality improvement in Kazakhtelecom JSC.
The main goal of the company is to become the No. 1 operator in terms of customer experience in the B2C and B2B segments. This goal can be achieved only through the involvement of each employee of the company, so special attention will be paid to the SRS and eNPS indices. There is serious work to be done on the transformation of current business processes for servicing, changing and improving communication channels and further digitalization of online service channels.
Occupational health, environment and industrial safety
For achieving zero occupational injuries, Samruk-Kazyna JSC has developed the Occupational Safety Action Plan for all Portfolio Companies.
As part of the implementation of this plan, Kazakhtelecom JSC held the I Annual Occupational Safety Forum, at which all top managers of the company signed personal labor protection obligations.
The main measures for occupational safety in the Plan can also include the granting of all employees of the company the right to work stoppages, the introduction of a behavioral monitoring program, training in the field of occupational safety according to the methodology of international programs, and the “Safety for Children” project.
The implementation of all these measures, according to the results of 2022, showed a positive result. The LTIF coefficient (frequency of injuries with temporary disability) decreased by 85% as compared to the beginning of the year, that is, from 0.7 to 0.1, and in comparison with the result of 2021, the company achieved 41% decrease in injuries, from 0.17 to 0.1. During the final meeting on occupational safety among Portfolio Companies, the Company was awarded for the best indicators and achievements in the field of occpational safety by the end of 2022.
For improving results achieved in the future, the Company has developed and started to implement the concept “Kazakhtelecom JSC Kauipsizdigi”, which is based on four pillars, such as: involvement of senior management in occupational safety issues; improving the quality of personal protective equipment, tools, equipment and devices; improving the efficiency of employees of the Safety and Labor Protection Service, involving all employees of companies.
Kazakhtelecom JSC retains absolute leadership in the telecommunications market of Kazakhstan. The company renders a wide range of services and services in all segments of the domestic telecommunications market: in the field of fixed telephony, broadband Internet access, mobile communications, pay television and IT products.
Kazakhtelecom JSC takes an active part in the construction of New Kazakhstan, developing digital services and helping to digitalize industrial and commercial enterprises of the country, local and central executive bodies. The main result of the work of Kazakhtelecom JSC is that about 99% of the country’s population has the opportunity to use all modern digital technologies.