KAZAKHTELECOM: Kcell's IPO Success to Determine Additional Proceeds

Mandatory IPO for Kcell. On 29 Nov, TeliaSonera announced the valuation range for the IPO of its Kazakh mobile subsidiary, Kcell. The latter’s equity value is estimated at $2.1-2.6bn and 25% will be listed in both London and Kazakhstan. TeliaSonera acquired 49% of Kcell from Kazakhtelecom for $1.5bn in 1Q12, which implied a $3.1bn valuation. Kcell’s IPO is dictated by an agreement between Kazakhtelecom and TeliaSonera, in which Kcell is required to list its equity by 1Q13.

Kazakhtelecom: cheap valuation.
Kazakhtelecom trades at a FY12E EV/OIBDA of 2.1x and P/E of 6.8x (Aton estimates). In our view, Kazakhtelecom should remain a good BUY opportunity for the next one-to-three years.

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