TeliaSonera raises $525 million from Kcell IPO

TeliaSonera says it has raised $525 million from the initial public offering (IPO) of Kazakh operator Kcell in the UK and Kazakhstan.

The Swedish telecoms incumbent offered up 25% of Kcell’s share capital and will hold a stake of 61.9% in the operator following the IPO.

Shares were priced at $10.50 for each global depository receipt – at the low end of the $10.50–13 range previously announced – valuing the business at $2.1 billion.

TeliaSonera says it has raised $525 million from the initial public offering (IPO) of Kazakh operator Kcell in the UK and Kazakhstan.

The Swedish telecoms incumbent offered up 25% of Kcell’s share capital and will hold a stake of 61.9% in the operator following the IPO.

Shares were priced at $10.50 for each global depository receipt – at the low end of the $10.50–13 range previously announced – valuing the business at $2.1 billion.

That looks disappointing given the $1.52 billion that TeliaSonera (Stockholm, Sweden) paid Kazakhtelecom (Astana, Kazakhstan), the country’s state-controlled fixed-line operator, for a 49% stake in Kcell (Almaty, Kazakhstan) earlier this year.

On the basis of that fee, Kcell was seen to be worth about $3.1 billion.

TeliaSonera, however, had agreed to float a part of Kcell as a condition of the deal with Kazakhtelecom that raised its shareholding.

The IPO is the second in which TeliaSonera has recently been involved.

In November, it sold its 35.6% stake in MegaFon (Moscow, Russia) during a flotation that raised about $1.7 billion in total.

“In a short period of time, and in a relatively tough stock market, we have managed to successfully complete two IPOs,” said Lars Nyberg, the president and chief executive of TeliaSonera, in a statement. “This increases the value of our stakes in both MegaFon and Kcell, which continues to be one of our most valuable subsidiaries and a strategic asset.”

According to Reuters, shares in Kcell were trading above their issue price – at about $10.80 – in early London trading on Wednesday.

Its country’s largest mobile-phone service provider in terms of revenues and customers, Kcell has continued to grow during a difficult period for operators in Western Europe, buoyed by Kazakhstan’s robust, oil-driven economy.

Analysts expect the share price to rise from its low flotation level given the relatively positive outlook for the company.