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JSC Kazakhtelecom

JSC Kazakhtelecom. 30 November 2006 Almaty. 2003A. 2004A. 2005A. 2006E. 2007E. 2008E. Population (m). 14.9. 15. 15. 15.1. 15.1. 15.2. Real GDP per capita (USD). 2,068. 2,716. 3,447. 3,939. 4,515. 5,239. Real GDP (% change). 9.2. 9.4. 8.8. 7.1. 7.2. 8.3.

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JSC Kazakhtelecom

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  1. JSC Kazakhtelecom 30 November 2006Almaty

  2. 2003A 2004A 2005A 2006E 2007E 2008E Population (m) 14.9 15 15 15.1 15.1 15.2 Real GDP per capita (USD) 2,068 2,716 3,447 3,939 4,515 5,239 Real GDP (% change) 9.2 9.4 8.8 7.1 7.2 8.3 GDP per Capita (USD at PPP) 8,119 8,976 9,767 10,586 11,413 12,411 General Government Balance (% of GDP) 4 2.2 2.7 2.5 2.3 2.5 Consumer Price Index (average, % change) 6.4 6.9 7.3 6.5 6.0 5.0 Source: Economist Intelligence Unit, Standard and Poor’s, Kazakh Economy • Kazakhstan is Central Asia's largest economy • Rapid growth over the last three years, buoyed by rising oil prices • First country in the former Soviet Union to receive an investment-grade credit rating in September 2002 • Currently, the sovereign is rated Baa3 (positive outlook) by Moody’s Investor Service and BBB (Stable) by Fitch and BBB (Stable) Standard & Poor’s

  3. Kazakh Economy • Structural reforms continue to proceed at a very reasonable rate • Banking system is well-supervised, with the new Financial Services Administration implementing EU-harmonized regulations • Privatization and tax reforms have made significant headway • Consolidated fiscal position has been in surplus since 2001. General government balance is expected to post a surplus of 2.7% of GDP in 2005 • Since 2003, KZT has strengthened by 20% and is expected to appreciate further in the medium term, given expected rise in oil and gas export earnings • Convertibility applies to all current account transactions and certain capital transactions. A full liberalisation of the capital account is expected in 2006-2007

  4. Telecoms Market Growth • Kazakh telecom market is growing rapidly as a result of the strong Kazakh economy • CAGR for the sector was 33.6% in the period 2000 - 2005

  5. Penetration level Number of fixed subscribers – 2.7 mln Number of mobile subscribers – 5.8 mln Telecoms market penetration rates

  6. Kazakhtelecom: Shareholding • The Kazakh state owns 50%+1 share of Kazakhtelecom through Samruk • Samruk = state holding company to administer state-owned shares in certain strategic companies • Samruk should: • Further increase the effectiveness of the management of State assets • Improve competitiveness and economic efficiency at company levels • Introduce corporate management benchmarking • Promote infrastructure development • Provide access to external markets

  7. Kazakhtelecom: Overall Results In a liberalized environment, the Company has achieved: • capitalization of USD 2.4bn (based on ADR quotation) • a long-term rating in foreign and national currency : • “ВВ”, “Positive”outlook (Fitch Ratings) • “ВВ”, “Stable” outlook(Standard & Poor’s) • “Euromoney” award as the best telecommunication company in the CISin 2005

  8. ADR quotation 2006, US$ Share Ratio 3:1

  9. Kazakhtelecom: MainIndicators 9 months 2006 • Revenues of USD 653m • Net profit of USD 191m • EBITDA (excluding income from investments) of USD 256m • EBITDA margin of 39% • Number of employees – 32,234 • Total assets – USD 1.6bn • Investments – USD 127m

  10. Participations in Other Entities • 100% in JSC “Altel” (CDMA, Dalacom) • 100% in LLP “Mobile Telecom Service” (GSM) • 100% in LLC “Signum” • 74.65% in JSC “Nursat” • 49% in LLP “GSM-Kazakhstan” (GSM, K’cell)

  11. Historical Profit and Loss Statement • Revenue grew by 24% in 2005 and 14% (y-o-y) for 9 months 2006 driven by the strong Kazakh economy and growing disposable incomes • EBITDA (excluding income from investments) reached KZT 32.6bn (USD 256m) for 9 months 2006 • EBITDA margin was flat at 39%

  12. Historical Cash Flows • Cash flow from operations grew by 47% in 2005 and 22% (y-o-y) for 9 months 2006 driven by revenue growth and changes in working capital needs. • Investment cash flows have been rising as a result of Kazakhtelecom’s investments into other entities (JSC “Altel”,JSC “Nursat”, LLP “Mobile Telecom Service”)

  13. Historical Balance Sheet • Strong balance sheet • Short-term debt and leases at USD 230m at 9m 2006 end • Long-term debt and leases at USD 203m at 9m 2006 end • Net debt to EBITDA ratio of 0.68

  14. Debt Maturity Profile • Current debt is caused by short-term financing for acquisition purposes • Expected to be refinanced by long-term debt in 2007

  15. Debt Currency Profile • Debt is mainly denominated in USD and EUR • The company will envisage hedge basing on its risk management system

  16. Subscribers and Revenues • Steady subscriber growth projected

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