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The telecommunications industry is to grow slower than the general economy, in our view, due to declining revenues on fixed and mobile voice services. We expect weaker macroeconomic environment to further contribute to the industry slowdown.
Mobile operators’ revenues total revenues decelerate, as services rates decrease on data and voice call segments. Data segment is gradually assuming an increasing portion of the total revenues. As the basis of competition is getting more data-centric, we expect operators with the highest smartphone penetration among subscribers to benefit most.
There are two leading mobile operators in Kazakhstan that account for about 81% of subscribers. However, two minor players have potential to shaken industry duopoly as Tele2 offers the lowest tariffs in the market and Altel is an exclusive provider of LTE services in Kazakhstan.
We expect Tele2 and Altel to benefit from forthcoming regulatory developments, such as MNP introduction and further decrease of interconnect rates. However, the regulator’s delays in granting 4G licensing to all operators and in releasing additional low-frequency spectrum create uncertainty, hampering competition in the industry and discouraging companies to develop the country’s cellular infrastructure.