INTERVIEW - Kazakhstan will limit foreign share of participation in telecommunication companies to 49 percent

/REUTERS, Astana, Raushan Nurshayeva, December 1, 03/ - The Government of Kazakhstan intends to limit in 2004 foreign share of participation in telecommunication companies to 49 percent, yet having found a difficulty to say that it expects foreign investors to stay, already possessing controlling interest over companies of the industry, and Scandinavian TeliaSonera in particular. Dualt Orazalinov, the deputy director of the state agency on information systems development and telecommunications said to REUTERS that the government proposed to the parliament a package of amendments to the law on telecommunications of Kazakhstan, and amendments to the law on national security. The latter provides for introducing of limits, which Orazalinov justified in terms of security and necessity to motivate local investors in the threshold of telecommunications market liberalization. "Foreign interest in telecommunications company according to these amendments must not exceed 49% of shares. Either directly, indirectly or through affiliated companies - it does not matter", - the official said to REUTERS during interview. "Of course, there are national security considerations. However, we are also reasoning that this is essentially protection of Kazakhstani market". Economical aspect - we should provide adequate protectionism for our investors: when the country joins WTO, boarders will be opened and our companies will be unable to compete with transnational operators", - he added. The government of Kazakhstan in 2005 - beginning of 2006 plans to liberalize the telecommunications market completely and to deprive the national operator Kazakhtelecom from the monopolistic right of providing international and domestic telecommunication services. During talks on Kazakhstan's inclusion into World Trade Organization (WTO), dates of possible joining had not yet been specified. In Orazalinov's opinion, the government of Kazakhstan should help local investors, regardless increasing disappointment of foreign companies, which are already working at our emerging market. "The economy of Kazakhstan is not bad now, we have got our own investors, and we should help them", - he said. The major foreign investor in telecommunications industry of Kazakhstan is Scandinavian TeliaSonera, which through its joint with Turkish TurkCell venture called FinTur possesses 51 percent of shares of a leading mobile communications operator of the country- GSM Kazakhstan. TeliaSonera controls 73.9 percent of FinTur, which works at CIS mobile communications market. Moreover, Golden Telecom company and one of the funds financed by EBRD have controlling interests in telecommunications companies. Orazalinov found difficulty to say that these investors will be present after amendments approval. According to him, right now "the problem is actively being discussed" with them. At the same time the government also considers possible lawsuits. "We of course try to avoid law suits. But prior to introduction of these changes we had considered possible options. We are convinced that we are acting right", - Orazalinov said. He expects that restrictions will come in force already in January - February of the next year after approval by the parliament, he also believes that they will be cancelled once local companies will have equal opportunities with world telecommunications giants. "Restrictions will be cancelled for sure - it is not a dogma. But today we are obliged to protect local companies in such a way and raise them, and when they grow up and start competing equally, then will cancel all restrictions", - Orazalinov said. [2003-12-01]