* GDR priced at $10.50 vs $10.50-$13.00 range
* Market capitalisation $2.1 bln at listing
* Strong economy backs Kcell's growth in Kazakhstan
* GDRs trade at $10.80 in London
(Adds Kcell CEO quotes, analyst)
By Dmitry Solovyov and Mariya Gordeyeva
ALMATY, Dec 12 Kcell shares traded
above their issue price on their market debut after Kazakhstan's
largest mobile phone operator raised $525 million for Nordic
The flotation of a 25 percent stake in Kcell in London and
Kazakhstan was priced at the bottom end of its offered range
at$10.50 per global depositary receipt (GDR) and 1,578.68 tenge
per ordinary share, the company said on Wednesday.
Its GDRs were trading at $10.80 in London at 1134 GMT.
The float price, at the low end of a $10.50-$13.00 range,
valued Kcell at $2.1 billion, below the price TeliaSonera paid
for a 49 percent stake earlier this year.
Telia agreed to the Kcell float as part of its acquisition
of a 49 percent stake from state-run fixed-line operator
Kazakhtelecom. Telia paid $1.52 billion for this stake, implying
a valuation of $3.1 billion for Kcell.
Following the Kcell initial public offering (IPO),
TeliaSonera will hold directly and indirectly 61.9 percent of
the company's common shares.
Kcell Chief Executive Veysel Aral said his company,
Kazakhstan's No. 1 mobile telecom operator by the revenue and
the number of subscribers, benefited strongly from robust
economic growth in the oil-producing nation.
Rating agency Fitch last month raised Kazakhstan's
investment credit rating to BBB+ from BBB. The government
expects Central Asia's largest economy to expand by no less than
5 percent this year after a 7.4-percent GDP rise in 2011.
"All this combined together - the country is very reliable,
the economy is very strong and growing, and the company is
delivering and its track record is very good - is a very
straightforward and clear story which makes it very attractive
for investors," Aral told Reuters in a telephone interview.
He reiterated Kcell's dividend policy, with a minimum of 70
percent of net income to be paid as dividends to shareholders.
"In the second quarter of 2013, there will be a special
dividend payout, which is going to be paid for the second half
of 2012," he said. "And the special dividend payout is going to
be 100 percent (of net income)."
Kcell , whose 12.7 million subscribers in Kazakhstan give it
a market share of around 48 percent, generated revenues of $888
million in the first nine months of 2012. Its net profit was
$307 million and EBITDA margin 56.0 percent in this period.
Aral said Kcell would focus its strategy in Kazakhstan on
expanding its faster third-generation (3G) network, which has
now reached 45 percent of the population coverage and extending
"The third pillar of the strategy - starting from today - is
to deliver healthy returns to our public shareholders on the
stock exchange," he said.
Kcell's IPO, which includes an over allotment option of up
to 5 million GDRs, followed last month's float by Russia's
second largest telecoms operator MegaFon, during which
TeliaSonera sold down its 35.6 percent stake in the company.
MegaFon also priced its share issue at the bottom of its
guided range, raising $1.7 billion, but the stock is now trading
11 percent above the IPO price.
TeliaSonera CEO Lars Nyberg said the latest share sale
reflected a "positive response" from both Kazakh and
international investors to the opportunity to invest in Kcell.
"In a short period of time, and in a relatively tough stock
market, we have managed to successfully complete two IPOs," he
said in a statement.
"This increases the value of our stakes in both MegaFon and
Kcell, which continues to be one of our most valuable
subsidiaries and a strategic asset."
Stanislav Yudin, analyst with Moscow-based Aton brokerage,
said the low price of Kcell's float should not discourage
"It went public very cheap, but it can rise -- just like
MegaFon is growing now after its IPO," he told Reuters.
Dmitry Brodsky, a director at Renaissance Capital investment
company, which acted as joint bookrunner for Kcell, said the IPO
was a success with strong investor interest, especially
considering that it took place after MegaFon's float.
"Moreover, the deal took place at a year-end, when investors
are not inclined to take extra risks," he said in comments sent
to Reuters. "The shares are rising on the secondary market,
which also underscores interest in the company and the deal."
Telia had said it planned to pay down debt with proceeds
from the Kcell and MegaFon sales.
Credit Suisse, UBS and Kazakh investment
bank, Visor Capital, were appointed joint global coordinators
and bookrunners for the IPO. Renaissance Capital is joint
bookrunner and Halyk Finance co-manager of the offer.
Kcell said unconditional trade in the GDRs on the LSE's
International Order Book are expected to start on Dec. 17.
The Kazakhstan Stock Exchange will start trade in Kcell
shares on Thursday.
(Additional reporting by Mariya Gordeyeva; Editing by Matt
Driskill and Hans-Juergen Peters)