TeliaSonera buys WiMax business, backbone stake in Kazakhstan

Swedish telecoms incumbent TeliaSonera has beefed up its business in Kazakhstan with the $170 million acquisition of WiMax operator Alem Communications and purchase of a minority stake in KazTransCom, a backbone network operator, for a fee of $35 million.

The transactions will help to bolster the position of Kcell (Almaty, Kazakhstan), TeliaSonera’s Kazakh subsidiary, which recently completed an IPO in London and Kazakhstan.

Swedish telecoms incumbent TeliaSonera has beefed up its business in Kazakhstan with the $170 million acquisition of WiMax operator Alem Communications and purchase of a minority stake in KazTransCom, a backbone network operator, for a fee of $35 million.

The transactions will help to bolster the position of Kcell (Almaty, Kazakhstan), TeliaSonera’s Kazakh subsidiary, which recently completed an IPO in London and Kazakhstan.

Previously owned by Midas Telecom, Alem Communications (Almaty, Kazakhstan) operates a WiMax network in six Kazakh cities and holds valuable frequencies in the 2.5/2.6GHz band, which TeliaSonera (Stockholm, Sweden) says are “compatible for use with mobile data transmission technologies such as 4G”.

Although WiMax is also widely regarded as a ‘4G’ technology, the mention of “technologies” suggests that TeliaSonera may look to use the airwaves to provide services based on the more popular LTE standard.

Subject to the satisfaction of conditions in Kcell’s IPO prospectus, TeliaSonera plans to transfer the WiMax operations to Kcell.

Kcell will also take control of the investment in KazTransCom (Almaty, Kazakhstan), whose network it already uses, following TeliaSonera’s acquisition of shares previously held by Alatau LLP.

“I am very pleased that we have been able to finalize these transactions which are crucial for Kcell’s continued leadership in mobile data,” said Tero Kivisaari, the president of mobility services and business area Eurasia.

“This reaffirms our strategic commitment to develop mobile technologies and services in Kazakhstan,” he said. “The transactions will secure frequencies, as well as further backbone capacity at competitive prices, for Kcell in the years to come. This is very important for Kcell’s future competitiveness, as data volumes continue to grow rapidly.”

TeliaSonera raised $525 million from offering 25% of Kcell’s shares in December, reducing its own stake in the company to 61.9% in the process.

The offer price of $10.50 valued Kcell at $2.1 billion, about $1 billion less than its implied valuation in early 2012 when TeliaSonera increased its stake.