Kcell in the first quarter: increase of marginality and improving trend of income


The Kcell JSC — leading mobile operator of Kazakhstan, has reported on results of work in the first quarter of 2019. The Company has started the year with new strong and experienced management team, top priority of which is stabilization and financial indicators and development of solid foundation for future growth. Due to complex and focused approach, income of the Kcell before payment of taxes, percent, wear-out and amortization (EBITDA) has increased by 12,6 percent and exceeded 14 bln. tenge and profitability upon EBITDA has improved up to 39,9 percent. Free flow of money has increased to 6,8 bln. tenge, and income from services of data transfer has increased by 2,7percent and accounted for 11,8 bln. tenge.

«Concentration of efforts of the Company on retention of quality client base led to increase average revenue from one user by 9,5 percent in comparison with similar period of the last year.Stable growth in corporate segment continued — total B2B income has increased by 14 percent. At that income from sales of business solutions has increased by 33 percent. Board of Directors of the Kcell recommended payment of annual dividend in the amount of 5,9 bln. tenge, which is 70 percent of net income of the Company for 12 months, which finished on December 31, 2018. In this very transitional period, important for the Company, together with our new strong team of new operational management and new highly professional Board of Directors, having extensive experience of management in telecommunication and financial industries, we do everything to increase effectiveness of the Company and provide our subscribers with services leading on the market,» noted Kaspars Kukelis, Chief Executive Officer of the Kcell JSC

Operational income of the Company, excluding non-recurrent expenses, in the first quarter of 2019 was stable at the level of 6,2 bln. tenge (К1 2018: 6,2 bln). At that net income was 8,7 bln. tenge (К1 2018: 2,3 bln.) due to fulfillment of obligation on payment of 14,5 bln. by the Company, which resulted from termination of cooperation with the Kar-Tel LLP within frames of the Agreement on joint use of network. This payment was accounted in financial reporting as non-recurrent expenditure.

In reporting period the subscriber base was 8,7 mln. of users (К4 2018: 8,9 mln.) due to continuation of implementation of strategy, directed to attracting and retention of quality clients and shifting away from distribution, based on volumes.

In the first quarter income form services of data transfer increased by 2,7 percent and amounted to 11,8 bln. tenge (К1 2018: 11,5 bln.), and data traffic increased by 34,7 percent, and amounted to 74,9 petabytes (К1 2018: 55,6 PB). The Company has continued development of 4G/LTE network, which covered more than 62 percent of population of Kazakhstan at the end of the reporting period. Withdrawal of the the Kcell form the agreement on joint development of network with the Kar-Tel LLP will not have significant effect on development of 4G/LTE services. The Company will use another scenario, which was foreseen in operation plan and was considered as quite positive and subscribers of the Kcell will eventually get access to higher standard of the 4G/LTE network

Currently the Kcell has a short-term advantage in the form of additional range in 4 large cities of Kazakhstan, which we will make maximum use for provision of high quality of 4G/LTE services to our clients. We also consider all potential possibilities and expansion of the scope of activity after obtaining of major shareholding of the Kcell by the Kazakhtelecom JSC in the end of 2018. This road map will allow to expand integration of infrastructure and networks which will lead to positive long-term influence on expenses, despite some primary investments," noted Kaspars Kukelis.

he Company continued to actively develop its business on sale of contract phones and upon the results of the first quarter, the income from sale of mobile phones accounted to 10 percent from total income or 3,5 bln. tenge. At that, in the end of 2018 90 percent of all sold smartphones were sold within the frame of the service «Contract phone».

Increase of profitability of the Company upon EBITDA confirms that the course for implementation of complex and focused approach on increase of operational effectiveness, chosen by new strong team of managing leaders and new major shareholder, Kazakhtelecom JSC, leads the Kcell to right direction of development.