Kazakhtelekom approved new methodology of buyout price calculation

At the end of 2018, minority shareholders of Kazakhtelekom appealed to the Company with the requirement to repurchase their shares. The main reason for the claim was a deal to buy out 75% of Kcell’s shares. The Company had to repurchase the shares within 30 days at a cost according to the methodology, which was in force at the time of filing application for the share repurchase at the end of 2018, which implied the share repurchase at the market price without a discount.

Our opinion:

We view this event as negative for the value of Kazakhtelekom’s shares, but, however, we believe that the new methodology, according to which the share repurchase from minority shareholders will be executed with 20% discount to the market price, will not significantly change our fair value estimate of the Company. We maintain our recommendation to Hold shares of Kazakhtelekom with 12M TP 32 000KZT/shares.