JSC Kazakhtelecom
30 November 2006
Almaty
Kazakh Economy
2003A
Population (m)
Real GDP per capita (USD)
Real GDP (% change)
GDP per Capita (USD at PPP)
General Government
Balance (% of GDP)
Consumer Price Index
(average, % change)
2004A
2005A
2006E
2007E
2008E
14.9
15
15
15.1
15.1
15.2
2,068
2,716
3,447
3,939
4,515
5,239
9.2
9.4
8.8
7.1
7.2
8.3
8,119
8,976
9,767
10,586
11,413
12,411
4
2.2
2.7
2.5
2.3
2.5
6.4
6.9
7.3
6.5
6.0
5.0
Source: Economist Intelligence Unit, Standard and Poor’s,

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 investmentgrade 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
2
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
3
Telecoms Market Growth
USD m
1800
1600
1400
1200
1000
800
600
362
400
200
0
2000
1543
1168
718
489
603
2001
2002
2003
2004
2005

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
4
Telecoms market penetration rates
40
35
30
%
25
Penetration level
Number of fixed
subscribers – 2.7 mln
Number of mobile
subscribers – 5.8 mln
20
17.7
15.9
15
15
12.3
13.1
17.1
14
10.2
10
5
38
2.1
0.9
0
2000
5.4
6.6
3.6
2001
4
3.3
2.7
2002
Telephone penetration
6.7
2003
Mobile penetration
2004
2005
Internet penetration
5
Kazakhtelecom: Shareholding

The Kazakh state owns 50%+1 share of Kazakhtelecom
through Samruk

Samruk = state holding company to administer stateowned 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
6
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 CIS in 2005
7
0,00
28 Nov, 2006
1 Nov, 2006
Oct 02, 2006
Sep 01, 2006
Aug 01, 2006
Jul 03, 2006
June 01, 2006
May 01, 2006
Apr 03, 2006
Mar 01, 2006
Feb 01, 2006
Jan 03, 2006
ADR quotation 2006, US$
140,00
120,00
100,00
80,00
60,00
40,00
20,00
Share Ratio 3:1
8
Kazakhtelecom: Main Indicators
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
9
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)
10
Historical Profit and Loss Statement
Profit & Loss Account
(KZT million)
2001
2002
2003
2004
45 754
56 804
65 880
80 096
99 558
24%
16%
22%
24%
18 758
21 699
25 991
31 562
39 118
41%
38%
39%
39%
12 057
14 109
17 323
EBIT margin
26%
25%
Group net income
7 276
11 558
Turnover
Y-o-Y growth
EBITDA
EBITDA margin
EBIT
2005 9m 2005
72 670
9m 2006
9m 2006
(USD m)
83 096
653
14%
14%
29 888
32 621
256
39%
41%
39%
39%
21 764
27 778
21 689
21 916
172
26%
27%
28%
30%
26%
26%
16 634
24 641
32 846
23 877
24 373
192

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%
11
Historical Cash Flows
Cash Flow (KZT m illion)
2001
2002
2003
2004
10 504
15 377
22 247
31 887
41 555
30 436
31 159
245
1 421
(2 561)
322
(3 511)
(490)
(4 600)
(2 108)
(17)
Interest + Dividends + Income Tax
(5 390)
(6 462)
(8 482)
(11 244)
(12 672)
(10 224)
(12 088)
(95)
Cash flow from operations
15 382
13 716
18 127
18 488
27 116
16 244
19 821
156
-11%
32%
2%
47%
22%
22%
(14 886)
(14 963)
(16 820)
(22 562)
(32 560)
(256)
12%
1%
12%
34%
110%
110%
820
(2 714)
(1 367)
(4 238)
14 320
113
Profit before tax
Working capital (needs)/gains
Y-o-Y growth
Cash flow from investing
(13 250)
Y-o-Y growth
Cash flow from financing
(1 395)
2005 9m 2005
(15 504)
(1 134)
9m 2006
9m 2006
(USD m )

Cash flow from operations grew by 47% in 2005 and 22% (yo-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”)
12
Historical Balance Sheet
Balance Sheet
(KZT m illion)
2002
2003
2004
Fixed assets
60 000
73 255
88 967
102 437
134 984
1 007,6
176 813
1 390
Current assets
13 117
16 795
19 483
23 622
26 713
199,4
32 263
254
2 144
1 794
2 245
2 746
3 619
27,0
4 443
35
Total Assets
73 165
90 050
108 450
126 059
161 697
1 207,1
209 076
1 643
Current liabilities
17 678
23 899
17 178
14 560
20 435
152,5
42 484
334
7 113
9 052
9 233
7 211
9 258
69,1
13 038
102
10 391
14 667
7 457
7 149
10 961
81,8
29 238
230
14 495
15 426
27 274
26 948
28 419
212,1
36 196
285
11 247
11 664
21 493
19 788
19 154
143,0
25 863
203
40 992
50 725
63 998
84 551
112 843
842,4
130 396
1 025
Cash
Payables
Short-term loans and leases
Long-term liabilities
Long term loans and leases
Shareholders' funds




2005 9m 2005
9m 2006
9m 2006
(USD m )
2001
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
13
Debt Maturity Profile
USD m
250
200
150
100
50
0
<1 year
1-2 years
9 months 2006
3-5 years
>5 years
2005

Current debt is caused by short-term financing for acquisition
purposes

Expected to be refinanced by long-term debt in 2007
14
Debt Currency Profile
100%
90%
80%
5%
8%
14%
Yen
27%
70%
Tenge
60%
South Korean
Won
50%
40%
77%
Euro
63%
30%
USD
20%
10%
0%
9 months
2006
2005

Debt is mainly denominated in USD and EUR

The company will envisage hedge basing on its risk
management system
15
Subscribers and Revenues
ACTUAL
FORECAST
2005
2006
2007
2008
2009
2,56
2,75
3,01
3,27
3,53
Growth %
7,9%
7,5%
9,3%
8,6%
8,0%
Penetration
17%
18%
20%
21%
23%
0,236
0,440
0,961
1,520
2,196
Growth %
-
86%
118%
58%
44%
No. of subscriber lines (Broadband
Access), mln
0
0,025
0,149
0,490
0,984
Growth %
-
-
496%
229%
101%
76,76%
81,40%
86,04%
90,68%
95,32%
Subscribers
No. of subscriber lines (fix), mln
No. of subscriber lines (mobile), mln
Digitization level %

Steady subscriber growth projected
16