Background to Kcell and mobile communications in Kazakhstan

The company was founded in 1998 and until recently was a limited liability partnership between the state owned incumbent JSC Kazakhtelekom (49%), and TeliaSonera/Fintur Holdings (51%). At the beginning of 2012, TeliaSonera acquired Kazakhtelecom’s stake of 49%.

Kcell is the leading mobile operator in Kazakhstan by market share in terms of revenue and subscribers, with over 11 million subscriptions as of the end of Q2/2012. During the 13 years of its operation, Kcell has been driving the development of the local mobile communication market by continuously expanding its network coverage, bringing in modern telecommunication technologies and industry knowledge. This is one of the reasons why over a half of the population has chosen Kcell subscriptions which are affordable for all categories of users – from pensioners to ministers.

Kcell was the first to launch GPRS/EDGE technologies and such services as WAP, MMS and mobile internet in Kazakhstan. The company is consistently enhancing customers’ experience by implementing new approaches to customer service, such as for example online queuing for physical visits to its service centres, interactive self-service displays in service centres, home delivery of its products.

Telecom industry in Kazakhstan

Kazakhstan is the world’s 9th largest country by territory which is roughly the size of continental Europe. The country’s population is more than 16 million people, with the density of about 6 people per square kilometer. Weather conditions are severe, with extreme heat in summer and extreme cold in winter (+40 to -40 degrees Celsius). This presents obvious difficulties in building fixed infrastructure, and fixed line penetration was very low at the time Kcell was being established.

When mobile services were launched back in late 90’s, the number of mobile subscribers was more in the tens of thousands range, while the individual bills for mobile communication were in excess of USD 1,000 monthly. The only service available for subscribers was voice calls. The word Internet was familiar only to a few thousand Kazakhstanis and receiving e-mails on the phone was beyond anyone’s imagination.

Nowadays, mobile penetration has surpassed 125 percent and the average monthly bill hardly exceeds USD 10. Access to the Internet from a mobile phone is as natural as receiving SMS. Users are asking when mobile Internet will become even faster and when 4G will be launched. Dwellers of even the furthest corners of the country have the possibility of connecting to the global information highway.

Kazakhstan has one of the highest per capita GDPs among Eurasian countries (USD 13,200 as per CIA Factbook estimates of 2011). The economy is growing thanks largely to the rich energy sector. However the government has realized the necessity of economy diversification and has been taking vigorous action to develop such areas as agriculture, transportation and telecommunications. Kazakhstan’s ambitious plan is to become a transportation, information and technology hub in Central Asia.

The government obviously realizes the important role mobile communications are playing in the development of the country’s economy and society. The licenses issued for mobile operators include conditions for obligatory coverage of all settlements with a certain minimum population within a certain time frame.

In 2010, Kazakh government issued 3G licenses to all GSM operators in the country, which has helped to significantly boost internet usage and access to online information, including social media. The rollout of 4G/LTE networks has not occurred on a commercial basis. 

Kcell contribution to Kazakhstan

Kcell has made a significant contribution to the country's economic development. After all, where mobile service is available, information exchange accelerates and modern, effective instruments for business development become easier accessible. Kcell has a vested interest in the long-term sustainable development of the country. The telecom industry is a reflection of the level of competitiveness of a state. By investing in telecommunications infrastructure, Kcell is contributing to Kazakhstan's vision of becoming one of the 50 most competitive countries in the world.

From 1999 and until mid-2012, TeliaSonera and Kcell have invested about USD 2 billion in the country. About the same amount has been paid in taxes and other obligatory payments to the state budget. Kcell is one of the largest tax payers in Kazakhstan. Besides, it has directly and indirectly created ca. 40,000 work places.

Kcell invests in a variety of social and cultural projects in Kazakhstan, especially those aimed at engaging youth and reviving the country’s national and cultural traditions. Every year, the company implements close to 50 social projects, where priority areas are education, sports and healthy living, supporting people with disabilities, and the national cultural heritage. Throughout its existence, Kcell has invested over USD 13 million in the social sphere.

Mobile communication serves health

In 2009, Kcell started providing free of charge Internet access and mobile communication to “Kovcheg” medical institution, to help doctors in diagnostics and treatment of children with cerebral paralysis.

Children’s Village “Kovcheg” was founded in 1997, as a charity project, with the aim to provide professional medical, rehabilitation and social adaption support to disabled children, orphans and children from low-income families, suffering from infantile cerebral paralysis. The Village is located near the capital city of Almaty, employs several Italian doctors along with local professionals, and has a connection to Italian clinics.

Kcell has laid a fiber-optic line to the village and installed a base station, enabling high-speed Internet access. Internet is now used both for medical diagnostic purposes and as an educational tool for disabled children. Thus, with the help of Kcell connection, doctors from Kovcheg can instantly send their patients’ data to the clinic in Italy and receive consultations, including even real-time consultations during surgeries. About 30 children are operated each month using remote help via Kcell Internet access.

Youth Bank of Ideas “Activ”

In 2009, Kcell initiated a project with the Eurasian Foundation Central Asia (EFCA) to inspire young people between 15-24 y.o. to get involved in the development of their local communities through volunteering and civic activism. The project provided professional training and small grants for realization of the selected idea proposals in Kazakhstan’s regions, especially targeting smaller cities.

The project was initiated at the time when Kazakhstan was experiencing economic recession. GDP growth turned negative, as a result of declines in oil and metal prices and problems in the banking sector following the global financial crisis. Kazakhstan has young population (median age 29 y.o.) and it is the youth who has been primarily counted upon when it comes to taking Kazakhstan to a better future. There were certain concerns about disengagement of youth in the community life. Kcell’s project provided opportunities for young people to develop professionally, while at the same time contribute to the development of their communities.

Surveys carried out in the framework of the project identified a broad range of topics that the young felt needed development. These included:

  • enhancing legal and economic knowledge of youth,
  • solving socio-economic problems,
  • addressing lack of civic activism among youth,
  • business run by youth and support for talented youth,
  • assistance to orphanages,
  • support for sports and leisure facilities for young people,
  • healthy lifestyle promotion and prevention of bad habits.

The project ended in July 2010, with more than 3,000 young people participating and 130 idea proposals seeking grants. The winning 16 proposals on a variety of topics ranging from university debates to better understand the legal rights of young people in the society, to teaching communication, and working with orphans were realized.

Support of female leadership

Recognizing the importance of gender empowerment, Kcell is supporting the Women Leadership project aimed at professional and leadership development of women in Kazakhstan. It is run together with Business Women Association of Kazakhstan and involves a variety of activities, such as training, conferences and workshops, public debates, etc. One of the activities was, for example, seminar meetings with women-leaders in regional cities on the subject of promotion of women leadership in politics.