Kcell Joint Stock Company


$1180m market cap

$5.9 last close

Kcell Joint Stock Company (Kcell) is a mobile operator in Kazakhstan and a listed subsidiary of Kazakhtelecom (KT), a state-owned incumbent with a 70% share of the market. Consolidation is delivering dramatic improvements in the market and as a subsidiary of the dominant operator, Kcell is well positioned to benefit.

Investment summary

The overall impact of COVID-19 and the falling oil price on Kcell is unclear at this point. Across the world telcos are seeing surging traffic but the indirect impact on economic activity may prove longer lasting, particularly in an oil-exporting nation. Following a c 80% rise in underlying profits and cash flow in FY19, we assume the pace of profit growth slows in FY20. Beyond FY20, further consolidation benefits (higher ARPU, lower D&A) should see Kcell deliver healthy profit and cash flow growth.

Y/E Dec
Revenue (KZTbn)
EPS (fd) (KZT)
P/E (x)
P/CF (x)
2018A 149.7 50.9 15.4 58.0 40.7 13.2
2019A 156.7 63.5 23.5 104.0 22.7 11.0
2020E 159.5 66.4 28.5 108.0 21.9 7.1
2021E 169.7 69.9 31.0 124.0 19.0 6.9
Industry outlook

Kcell’s prospects have been transformed following KT taking a 75% stake in the business. Consolidation is helping to sustain a recovery in the Kazakhstan mobile market, new management successfully introduced a strategy targeting higher margin segments and Kcell’s major shareholder is now the dominant national telecom player. 2019 saw the company deliver its first growth in service revenues in five years. With little near-term risk of regulatory intervention or a resurgence in aggressive competition, the current market structure appears sustainable.

Last updated on 30/06/2020
Share price graph
Balance sheet
Forecast net debt (KZTbn) 28.6
Forecast gearing ratio (%) 33
Price performance
Actual 12.4 (1.3) 19.4
Relative* N/A N/A N/A
52-week high/low US$6.0/US$4.4
*% relative to local index
Key management
Kaspars Kukelis CEO