ASTANA, Kazakhstan, December 7. Fitch Ratings has affirmed Kazakhstan's Kcell JSC's Long-Term Issuer Default Rating (IDR) at 'BB+' with a stable outlook, Trend reports.
As the Fitch explains, Kcell's ratings benefit from its moderate to strong linkage to its parent, Kazakhtelecom JSC (Kaztel, BBB-/Stable). Kcell has a Standalone Credit Profile (SCP) of 'bb'.
The one-notch rating differential between Kcell and Kaztel reflects Kcell's standalone status as a public company with a large minority shareholding, the parent's commitment to running Kcell as a separate entity and minimal parental guarantees.
Following the purchase of 5G spectrum and the associated capex requirements coupled with 4G infrastructure upgrade needs, Fitch forecasts capex to rise to 75 percent of revenue in 2023 from 17 percent in 2022 and to remain high at 25 percent - 35 percent in 2024-2025.
Kcell and its sister company Mobile Telecom Service LLP (MTS) acquired frequencies in 3,600-3,700 MHz (100 MHz) and 3,700-3,800 MHz (100 MHz) radio frequency bands for KZT156 billion, for which they paid equally in 1H23. Following the acquisition of the spectrum, the companies will have to install more than 7,000 5G base stations throughout the country by 2027.
In addition, Fitch expects the mobile segment to be one of Kaztel's major growth drivers.
Kcell is the second-largest mobile-only operator in Kazakhstan. At end-2018, 75 percent of the company's share capital was acquired by state-owned fixed-line incumbent operator Kaztel from Telia. Kaztel sold 24 percent of Kcell in September 2021 on the Kazakh Stock Exchange, retaining a controlling 51 percent stake in the company.