Information on administrative sanction imposed on Kcell JSC

Almaty, 19 May 2014 – Kcell JSC (the Company ) (LSE, KASE: KCEL), brings this information to the notice of its shareholders and investors pursuant to paragraph 1.9 of Article 79 of the Law On Joint Stock Companies of the Republic of Kazakhstan.

The court decision of 7 March 2014 imposing the 16 054 million tenge fine on the Company has been amended. The judicial board on civil and administrative cases of Almaty City Court, by its ruling #3a-324/2014 of 15 April 2014, imposed an administrative sanction on the Company in the form of a fine in the amount of 325 850 322 tenge for an offense punishable under part 3 of article 147 of the Code of Administrative Offence of the Republic of Kazakhstan, which prescribes a fine at the rate of ten percent of income (revenue) resulting from monopolistic activity prohibited under Kazakhstan Law On Competition. This court ruling came into force.




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Company Overview


Kcell is the leading provider of mobile telecommunications services in Kazakhstan by market share in terms of revenue and the number of subscribers. It has operated since 1998, and as at 31 December 2013 it had approximately 14.3 million subscribers, representing a market share of 46.2%, as estimated by the Company. Its estimated market share in terms of revenue was 54% for the year ended 31 December 2013.

Kcell provides mobile voice telecommunications services, value-added services such as short message services, multimedia messaging services and mobile content services, as well as data transmission services including internet access. It has two brands: the Kcell brand, which is targeted primarily at corporate subscribers (including government subscribers), and the Activ brand, which is targeted primarily at mass market subscribers. The Company offers its services through its extensive, high quality network which covers substantially all of the populated territory of Kazakhstan.

In December 2012, Kcell successfully completed its offering of GDR’s on the London Stock Exchange and common shares on KASE. The price was set at USD 10.50 per GDR and KZT 1,578.68 per share with each GDR representing one share.  The offering consisted of a sale by TeliaSonera of 50 million shares, representing 25 percent of Kcell’s share capital. TeliaSonera holds directly and indirectly 61.9% of the Company’s common shares.

Kcell plans to benefit from the significant growth potential for mobile data services in Kazakhstan. The Company intends to continue to invest in the deployment of its 3G network to expand coverage. Kcell aims to maintain its market leadership in terms of revenue and the number of subscribers by offering its products and services at competitive prices, expanding its offering of products and services, maintaining the high quality of its network and enhancing its brand value.