Shareholders of Kazakhtelecom are against its break-up

/IRBIS, Apr.4, 00/ - Shareholders of Kazakhtelecom consider the break-up of the biggest national communication company planned by the government inexpedient, since, in their opinion, it would incur additional costs and would decrease the quality of the services, informs REUTERS. Break-up of Kazakhtelecom will invoke inefficiency that will weaken both the company and the industry, and it will be hardly beneficial to the customers, which is the final goal of antimonopoly committee, said the representative of ALG Silk Road Capital, one of the shareholders of the company. It is said the government has bring the question on demonopolization of the company into light. The company controls about 90% of the market and has stakes in authorized capitals of 11 private companies. Antimonopoly committee suggests to break-up the company based on its territorial and functional principles, is said. Nurlan Aldabergenov, the representative of antimonopoly committee department of Almaty said the demonopolization is needed to make the expenses and the company itself transparent. He added they had to work out the mechanisms so that the interests of the shareholders will not be ignored. The government of Kazakhstan is the major shareholder of the company with 50% of shares, Kazkommertsbank is the second with 30% of shares and other 10% of common shares and 10% of preferred shares are freely circulated on the stock market. investors and shareholders believe the break-up will cause the value of the shares to fall on international stock markets. The representative of ALG Silk Road Capital said investors and shareholders invest into the company based on the condition that it is the company offering integrated services throughout the country. He added it has been one of the factors that influenced their investment decision. He said Kazakhstan was a small market by international standards and telecommunications was the industry where the effectiveness depends mainly on "economies of scale", and all its network was similar to that of middle and big city of USA or Europe. It is against the worldwide trend towards globalization of the company that takes place everywhere to make the services better and be more competitive, he said. As a national operator, the company provides the population and corporate clients with "a universal access" to general telecommunication network. It contributes 2% to the GDP. Authorized capital of the company is estimated at KZT12.1 bln, shareholders' equity - KZT33.524 bln. The representative of ALG Silk Road Capital says institutional and other investors will require the compensation for the losses incurred due to forced sales. He added that Kazakhtelecom should stay on the market if the country needs modern, competitive telecommunication industry. ($1 = KZT141.90)