Qatar’s Power International Holding (PIH) has officially finalized its $1.1 billion acquisition of Mobile Telecom-Service LLP (MTS) from Kazakhtelecom JSC (KT), marking a significant shift in Kazakhstan’s telecommunications landscape. The acquisition, which was first announced in February 2024 and formalized through a sale and purchase agreement in June 2024, underscores PIH’s growing presence in the region’s telecom and technology sectors.
Key Details of the Acquisition
The acquisition agreement was signed by PIH, Kazakhtelecom, and Samruk-Kazyna, Kazakhstan’s sovereign wealth fund, which has a controlling stake in Kazakhtelecom. Kazakhtelecom has owned MTS since 2019, which operates under the Tele2 and Altel brands, providing mobile services to approximately seven million customers across Kazakhstan.
Strategic Move to Enhance PIH’s Telecommunications Portfolio
PIH’s acquisition of MTS aligns with the company’s broader strategy to strengthen its telecommunications portfolio. This move is seen as a key element in PIH’s plan to drive growth in digital and technology services. Ramez Al-Khayyat, President of PIH, emphasized that the acquisition would contribute significantly to Kazakhstan’s digital transformation by enhancing the country’s digital infrastructure and offering innovative solutions to its growing telecom market.
“The acquisition allows PIH to better support the digital transformation in Kazakhstan and elevate the overall telecommunications experience,” said Al-Khayyat.
MTS’ Role in Kazakhstan’s 5G Development
MTS, along with its subsidiaries Tele2 and Altel, is also a key player in Kazakhstan’s ongoing 5G infrastructure project. The telecom company is part of a consortium responsible for installing 5G base stations across the country to bolster Kazakhstan’s network capabilities. The acquisition by PIH positions the company to actively participate in the development of next-generation connectivity, aligning with Kazakhstan’s ambitions to improve its digital economy.
Financing the Acquisition
The acquisition of MTS was financed through a consortium of prominent financial institutions. Citi and Qatar National Bank (QNB) played leading roles as coordinators, book runners, and mandated lead arrangers for the deal. Additional support came from Halyk Bank, ICBC Standard Bank, Bank of Bahrain and Kuwait, and Commercial Bank International. This robust financing structure underscores the confidence investors have in PIH’s strategic direction within the telecom sector.
Kazakhtelecom’s Market Dominance and Sale of MTS
Kazakhtelecom has long held a dominant position in Kazakhstan’s telecommunications market, also part-owning Kcell, the country’s largest mobile operator with over 10.5 million subscribers. The sale of MTS is part of Kazakhstan’s broader efforts to reduce market monopolization, encouraging a more competitive environment in the telecom sector. By offloading MTS, Kazakhtelecom is strategically reshaping its market share, paving the way for more players to enter the market.
Impact on Kazakhstan’s Telecom Market
The sale is expected to reduce Kazakhtelecom’s dominance in the country’s telecom sector, fostering greater competition and innovation. While the government has emphasized reducing monopolies, Veon’s subsidiary Beeline Kazakhstan remains the primary competitor to Kazakhtelecom in the market. This competitive landscape is expected to benefit consumers by driving service improvements and offering more affordable options.
Future Prospects for PIH in Kazakhstan
Looking forward, PIH is poised to play a critical role in the ongoing development of Kazakhstan’s digital infrastructure. With its acquisition of MTS, the company will be well-positioned to enhance digital connectivity, contribute to the growth of the telecom sector, and potentially introduce new products and services aimed at both consumers and businesses.
FAQ Section
1. What is the total value of the MTS acquisition by PIH? The acquisition of MTS from Kazakhtelecom was valued at $1.1 billion.
2. What brands are part of the MTS network in Kazakhstan? The MTS network in Kazakhstan operates under the brands Tele2 and Altel, serving a customer base of around seven million.
3. How does this acquisition impact Kazakhstan’s 5G development? MTS, along with its subsidiaries, is involved in a consortium that is working to install 5G base stations across Kazakhstan, which is a key aspect of the country’s digital transformation efforts.
4. Why did Kazakhtelecom sell MTS? Kazakhtelecom’s sale of MTS is part of Kazakhstan’s broader strategy to reduce monopolization in the telecom sector and create a more competitive market.
5. What role did financial institutions play in the acquisition? The acquisition was financed through a consortium of financial institutions, with Citi and Qatar National Bank (QNB) leading the deal, along with several other banks.
