Kazakhstan Telecommunication Market

KAZAKHSTAN
Kazakhstan gained its independence in 1991. The collapse of the relations with the
former Soviet Union exacerbated a decline in production and led to high inflation. The
countr has successfull overcome the difficulties provoked b the 199! "ussian
financial crisis and has become the first #$S countr to access international capital
markets. %oreign direct investment has also benefited from this positive evolution&
although much of it has been in oil and gas.
$n '(((& the Kazakh )*+ e,ualled approximatel !-.. billion US /. The #ountr0s
)1+ per capita was estimated to reach 2&!-1 US /. $n '(((& the turnover of the
Kazakh telecommunications market was estimated to 2( billion Tenge
1
. $t
represented some '3 of the countr0s )*+. 4ore than .2&((( persons worked in
this sector.
$t should be noticed that despite the fact that Kazakhstan is the 9
th
biggest countr in the
world 5'&-1-&((( s,uare km6 it has onl 17.9 million inhabitants 5according to the 1999
census of population data6. The population0s densit is estimated to be about 2&2
people per s,uare km.
PART I THE TELECOMMUNICATIONS MARKET
Chapter 1 The main operators
Section 1 The main man!actrers
$t must be underlined that the local production is not significant and consists mostl of
producing telephone sets& telephone exchanges& cables& and wires. #onse,uentl& the
rapid development of telecommunications has encouraged several foreign
manufacturers and suppliers to establish a presence here. 4otorola& 8ucent
Technologies& 9ricsson& Siemens& :lcatel& 1okia& *aewoo& and 1ortel are presentl
active in Kazakhstan. ;igh demand for telecommunications products comes from the
following sectors< aviation& oil and gas& power generation& banking& and mining.
SIEMENS This compan has been present in Kazakhstan since 1997. The first Siemens
representative office was opened in :lmat. $n 1999& Siemens 8imited was created. $n
'(((& another Siemens representative office was opened in :stan. The compan has
more than 1(( emploees in Kazakhstan. Siemens 8td. has ten departments working in
different business areas such as medicine& energ& telecommunications networks&
transportation sstems etc.
ERICSSON LM $t was established in :lmat in :pril 199-& as an 9ricsson0s
representative office in Kazakhstan. $t was providing e,uipment and network
1
In June 2002, 1 Euro bought 143.344 Tenge (KZT), while in December 2000 the ech!nge r!te w!" 124.#4$
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' 1
management for the K@#ell 5)S4 Kazakhstan6. $n '((1& 9ricsson Kazakhstan was
established as a compan with 1((3 foreign 59ricsson6 capital. The 9ricsson0s mobile
handsets are delivered in Kazakhstan via a K@#9880s partner< TU"K#988 5a Turkish
mobile operator6.
NOKIA" LUCENT TECHNOLO#IES" CISCO S$STEMS" ALCATEL 1o information provided.
Section % The main ser&ice pro&i'ers
'.1. The incumbent operator
KAZAKHTELECOM (KT)* $t was created in 1997 on the basis of the telecommunication
infrastructure belonging to the State& represented b the 4inistr of #ommunication of
Kazakhstan. $nitiall established as a national Boint stock compan& KT was re@
registered as open Boint stock compan in 199-. :ccording to the Kazakh legislation&
there can be two tpes of Boint stock companies 5CS#6< Dopen CS#E and Dclosed CS#E.
$n contrast with closed CS#& open CS#0s shareholders can sell their shares freel&
without being obliged to receive a consent of the rest of the stockholders.
F(3 of KT0s e,uit is owned b the Kazakh government& .(3 is owned b a local
private bank DKazkommertsbankE& and the remaining 1(3 is split between
:merican and 9uropean investors.
The KT holds a general licence delivered on the 2
th
of 1ovember 199F. :ccording to the
terms of this licence& KT has the status of a unique national operator in charge of
ensuring the development& implementation and management of the public
telecommunications network. KT has also the status of an operator of the public
telecommunications network and an exclusive provider of the long distance and
international services in Kazakhstan. $n addition& KT is the onl operator& that took
on the obligation to provide universal telecommunications services like rural
telephon.
G *ecember '(((& KT had about .(&((( emploees and its turnover amounted to .!
billion Tenge6.
KT provides a wide range of telecommunications services namel< voice telephon
5local& long distance and international6& cellular& paging& telegraph& telex& $nternet access
and other services 5:*S8& leased lines6& corporate digital networks& satellite
communications and wire broadcasting. KT is carring out a national programme of
modernisation of the entire telecommunications sstem aiming to provide a unified
information environment based on the latest telecommunications technologies.
The KT0s head office is located in :stana& the new capital of Kazakhstan. The #ompan
has .1 representative offices all over the countr and a number of subsidiaries such as
Kulan 5satellite communications6& C@run 5digital business telephone network6 and
Kazakhstan =nline 5$S+6. $n addition& KT is a shareholder in some private Kazakh
companies including G9#9T $nternational and )S4 Kazakhstan 5mobile telephon
operators6.
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' '
$ts maBor business partners are Siemens& :lcatel& 9ricsson& Telenor& Turkcell& 19#&
*aewoo& #isco& 4otorola& 8ucent Technologies& etc.
'.'. '.'. %ixed telephon operators other than KT
:part from the incumbent& some private companies are operating in the fixed telephon
market. 4ost of them are the owners of so@called governmental networks that have
received a telecommunications licence for the provision of public telephon services.
=thers have built their own network. Those private companies are basicall dealing with
the corporate market and their market share remains meagre.
+UCAT Since spring '(('& *ucat has been the new brand name of the Kazintel
)roup
'
. +reviousl the mark :"1: was used for the provision of Kazintel fixed
telephon services. The compan was mainl operating in the former Kazakh capital&
:lmat. This compan is considered as the second largest operator behind KT.
:"1:0s annual revenue amounted to 1( million US *ollars 511 million 9uros6.
:mong its clients there are '7 foreign diplomatic representations& 1'( foreign firms0
representative offices and more than '(( foreign companies. $t also provides services
to the governmental and local authorities.
:rna0s maBor business partners include :lcatel& 19#& 9ricsson and "atel 5a *U#:T&
former Kasintel group compan6.
,-RUN $t is a digital business telephon network build b KT in 199-. C@"U1 provides
following services< local& long distance and international telephon& $S*1& $nternet
access& etc.
'... 4obile operators
There are three mobile telephon operators in Kazakhstan.
.ECET INTERNATIONAL This compan is the oldest mobile operator in Kazakhstan. $t is
a Boint venture between 4etromedia $nternational #orporation 5US:6 and
Kazakhtelecom. 9ach of them owns 2(3 of the shares. $n 1997& G9#9T was granted a
12@ear licence to operate analog cellular networks
.
. *uring the first five ears& it
enBoed an exclusive right to provide mobile telephon services in Kazakhstan. G9#9T
$nternational is operating under the :8T98 brand name. $n :ugust 199!& :8T98 has
launched a prepaid sstem called TU4:". G the end of 1999& TU4:" had more than
'
K!%intel w!" the &ir"t K!%!'h tele(hone hol)ing &oun)e) in 1**+. It w!" the re"ult o& !n !lli!nce o& two
telecommunic!tion" o(er!tor" ,-., (&ie) tele(hon/) !n) -,TE0 ("!tellite communic!tion"). In 2000,
K,ZI.TE0 h!" too' "ome e1uit/ (!rtner" !n) become ! &orm!l grou( "tructure. K!%intel i" owning #$.23 o&
,-., !n) 1003 o& -,TE0. The Euro(e!n 4!n' &or -econ"truction !n) De5elo(ment (E4-D) i" one o& the
K,ZI.TE06" m!7or "h!rehol)er". In 2002, K!%intel !)o(te) ! new br!n) n!me D89,T, uni1ue &or the
m!r'eting !n) commerci!li"ing o& !ll "er5ice" (ro5i)e) b/ ,-TE0, -,TE0 !n) K,ZI.TE0
.
4E9ET Intern!tion!l6" licence w!" gr!nte) be&ore the !)o(tion, in 1**2 o& the K!%!'h"t!n6" &ir"t l!w on
licence". :or more )et!il" on the 0icence" 0!w "ee ;!rt II.
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' .
1(&((( clients. $t has been estimated that at the end of '((1& the compan0s market
share was about '13.
The compan uses 4otorola network e,uipment and operates the :4+S !((
5:merican 4obile +hone Sstem6 standard. $t provides mobile telephone services in
:lmat and :stana as well as in 11 5of 176 regional capitals.
#SM KAZAKHSTAN This compan was established in 199!. $t is a Boint venture between
Kazakhtelecom 57936 and Turkcell 52136& a Turkish mobile operator& whose
shareholders include Sonera 5%inland6.
)S4 Kazakhstan is the first compan which has provided in Kazakhstan cellular
services based on the )S4 9(( standard. $t started operating in %ebruar 199! under
the K@#988 brand name. $n 1ovember 1999& it also launched a prepaid mobile services
under the brand name :#T$H. $n addition& since :ugust '((1& K@#988 in co@operation
with Thuraa 5U:96 is providing satellite mobile telephone services. $n order to use this
service& clients need to insert a K@#988 simcard into a Thuraa mobile handset. G the
beginning of '(('& )S4 Kazakhstan had about F(3 of the Kazakh mobile telephon
market.
)S4 Kazakhstan covers 79 cities in the countr. $ts network uses e,uipment provided
b 9ricsson so called $ntelligent #ommunications +latform.
KAR-TEL This compan started operating in 1999. Kar@Tel is a Boint venture between
T98S$4 5-(36& a Turkish mobile operator& "U498$ )roup and
K:I$1%="4T989#=4 5.(36.
This compan started operating the second )S4 9(( network in Karaganda& the
second largest Kazakh cit. K:"@T98 is operating under two brand names< K@4obile
and K@#ard 5prepa6. The network e,uipment was provided b 1okia and 4otorola.
G the end of '((1& the compan was covering 7' Kazakhstan0s cities. G the same
time& the Kar@Tel market share was approximatel of 193.
'.7. +aging operators
There are some '' paging operators in Kazakhstan. The biggest paging providers
include ACCEPT PA#E" ASPAN LT+*" ALSI ASIA PA#E" ALMA PA#E and ME#A PA#E.
Those companies utilise 4otorola& +hilips& 8) and Samsung e,uipment.
'.2. *atacom operators
KAZNET . This compan was created in 199. b :ST98 5$S+6. Kaznet provides a
global data packet@switching network& $nternet access and +#@based direct e@mail& fax
and telex. The compan0s business partners include )lobal =ne.
+UCAT 5ex K:I$1T986. This compan provides data and voice transmission& video@
conference& local networking& and connection to a number of information networks
5S$T:& Gloomberg& "euters& etc.6.
NURSAT This compan was established in 199F as a Boint venture between 8ucent
Technologies& Kazinformtelecom& the State +ropert #ommittee of Kazakhstan and a
US compan
7
. $n fact& the establishment of this Boint venture was aiming to convert a
former Soviet militar space program0s command centre& the Sar@Shagan site& into a
network for voice and data transmission.
The compan operates its own countrwide full digital satellite network and provides a
wide range of telecommunications services including the access to internet& data
transmission& international and long distance satellite telephone communications&
satellite channels& corporate networks& video conference& mobile satellite
communications etc.
1ursat utilises e,uipment provided b #isco Sstems& :"K& 8ucent& 4otorola& +aigan
etc.
'.F. $nternet Service +roviders 5$S+s6
KAZAKHSTAN ONLINE 5K=6 This compan was established in 199! b
Kazakhtelecom. $n 1999& K= became an integral part of KT0s administration.
K=0s maBor business partners are #isco Sstems& )eneral *ata#omm $ndustries& inc.&
)lobal =ne 54oscow6 and #able J Kireless.
ASTEL was established in 199.& initiall as :rna Sprint *ata #ommunications. $t has
created the first Kazakh public data communications network and developed integrated
telecommunications network& Kaz1et.
=n the basis of high speed satellite and fiber optic communications channels& the
compan is providing data& voice and video communications& web hosting& local
corporate networks 5telephone and telecommunications6& and the access to $nternet.
:stel has '1 regional representative offices.
$t utilises& among others& 19#& #isco Sstems& 1ortel& ":* *ata #ommunications&
)ilat Satellite 1etworks& #abletron Sstems& 8ucent Technologies and $4H Hictron
e,uipment.
KAZIN/ORMTELECOM 5K$T6 $t was created in 1997 as a Boint stock compan. $t is an
authorised operator of $ntelsat.
$t provides access to $nternet& connection to the $nfotel networks and an international
$ntelsat@based satellite communications network. $n '((( it has received a licence to
provide Ho$+ services.
7
.o in&orm!tion coul) be &oun) !bout thi" com(!n/, which "eem" to h!5e "ol) it" "h!re".
The compan0s maBor business partners are #isco Sstems& 8ucent Technologies&
4otorola& Siemens& Sagem& *eTeSat etc. K$T is developing proBects aiming to provide
satellite communications and connections to hotels and business centres world@wide.
SA TELECOM* $t has been present in Kazakhstan since '(((. $t is a subsidiar of
)olden Telecom& which was created in 1999 in "ussia b )lobal TeleSstems
)roup 5US:6. S: Telecom operates its own satellite network.
S: Telecom0s maBor business partners are :TJT& #ableJKireless& Unisource and
Sonera.
'.-. Satellite
,AR$KH This compan is operating since 1997. $t is the accounting authorit and
routing organisation for $nmarsat in Kazakhstan.
The compan provides satellite communications services including telephon services&
data transmission and satellite TH. :part from $nmarsat& the Carkh0s maBor business
partners are Thrane J Trane& Telenor& )lobal :rea 1etwork& 4obi, and Lantic. Carkh
has five Boint ventures with :merican& Gritish and $ndonesian companies.
NURSAT This compan was established in 199F as a Boint venture between 8ucent
Technologies& Kazinformtelecom& the State +ropert #ommittee of Kazakhstan and a
US compan which has since sold its shares
2
. $n fact& the establishment of this Boint
venture was aiming to convert a former Soviet militar space program0s command
centre& the Sar@Shagan site& into a network for voice and data transmission.
The compan operates its own countrwide full digital satellite network and provides a
wide range of telecommunications services such as 5among others6< access to internet&
data transmission& international and long distance satellite telephone communications&
satellite channels& corporate networks& video conference& mobile satellite
communications etc.
1ursat utilises e,uipment from #isco Sstems& :"K& 8ucent& 4otorola& +aigan etc.
RATEL $t is a Kazintel )roup 5now *U#:T
F
6 compan 51((36. $t has revenues of
about 7 million US *ollars.
":T98 provides the following services< local and corporate network solutions&
international telephon& satellite channels lease& broadband access to $nternet& etc. $ts
maBor business partner is T98ST": 5:ustralia6.
TNS-PLUS. This compan provides services using $nmarsat and HS:T satellites.
2
,g!in, no in&orm!tion coul) be &oun) !bout thi" com(!n/, which "eem" to h!5e "ol) it" "h!re".
F
K!%intel i" the &ir"t K!%!'h tele(hone hol)ing &oun)e) in 1**+. It w!" the re"ult o& !n !lli!nce with two other
telecommunic!tion" o(er!tor" ,-., !n) -,TE0 ("!tellite communic!tion"). In 2000, K,ZI.TE0 h!" too'
"ome e1uit/ (!rtner" !n) become ! &orm!l grou( "tructure. It w!" owning #$.23 o& ,-., !n) 1003 o&
-,TE0. The Euro(e!n 4!n' &or -econ"truction !n) De5elo(ment (E4-D) i" o& the K,ZI.TE06" m!7or
"h!rehol)er". In 2002, K!%intel !)o(te) ! new br!n) n!me D89,T, uni1ue &or the m!r'eting !n)
commerci!li"ing o& !ll "er5ice" (ro5i)e) b/ ,-TE0, -,TE0 !n) K,ZI.TE0.
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' F
KULAN $t is a satellite network owned and operated b KT. KU8:1 offers telephone
and data communications services to business clients
-
.
-
:or more in&orm!tion !bout K80,. "ee ;!rt 1, 9h!(ter 2, (oint 1.2. ("!tellite).
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' -
Chapter % The in!rastrctre an' ser&ices
Section 1 - The te0ecommnications in!rastrctre
The building of the national telecommunications infrastructure is considered b the
)overnment as a priorit issue. To that end& it intends mobilise more 72( million US
dollars within the five ear period started in '((1
!
.
1.1. %ixed telephon infrastructure
G the beginning of '((1& the fixed telephone densit in Kazakhstan was about 1..F7
telephone lines per 1(( inhabitants. The telephone densit in cities was about '(&9
telephone lines and in the provinces 7.2' telephone lines per 1(( inhabitants. There
were .((9 switching centres 52!( in cities and '7'9 in the countr6 installed. There
were about '.7 million lines installed& 1.! million of those lines were subscribed. '93 of
lines in use were digital.
G the end of '((1& the total length of the telecommunications network in Kazakhstan
was about 1!F&--(&'(( kilometres& of which 17'&19!&.(( km were digitall enhanced.
1.'. 4obile telephone infrastructure
G the end of '(((& )S4 K:I:K;ST:1 has invested more than 1'( million US
dollars and '. million US *ollars within '((1& onl for the development of its network.
The compan is currentl developing its network in order to cover all Kazakhstan0s
cities with more than 2(&((( inhabitants and the maBor Kazakhstan0s motorwas such
as :stana@:lmat& :lmat@Gishkek& and :stana@Gorovoe.
K:"@T98 is also developing its network and& in '((1& was planing to invest for these
purposes 7F million US *ollars.
#oncerning U4TS&
the government does not foresee in the short term to operate U4TS network. $t could
be envisaged that a uni,ue licence would be granted to the national operator
Kazakhtelecom. The public tender will be launched in case the latter would waive
9
.
1... *ata transmission network
!
<ee =o5ernment6" >9once(tion o& the K!%!'h"t!n6" telecommunic!tion" "ector )e5elo(ment &or the (erio)
&rom 2001 to 2002?, 4.12.2001, n@12#4.
9
8no&&ici!l in&orm!tion (ro5i)e) b/ the 9ommerci!l "ection o& the :rench emb!""/ in K!%!'h"t!n.
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' !
Kazakhstan =nline has initiall invested some ! million US *ollars into the building and
development of the national data communications network.
1.7. %iber optic
Kazakhstan has participated in the construction of the Trans :sia@9urope =ptical %iber
#able 5T:96 network. The Kazakhstan0s part of the T:9 network represents 1&-2( km.
This proBect served as an impulse to the creation of the 1ational $nformation Trunk 8ine
51$T86. G the end of '((1& the 1orthern part
1(
51.- km6& and the Kestern part
11
5'2'!
km6 of the 1$T8 were build.
The construction of the 9astern part
1'
& the "adial part and the north@western part is
being continuing. The building of the Kestern 1$T8 was wholl financed b Siemens.
The latter has also signed a contract for the construction of the 9astern part of 1$T8.
The government expects that the whole 1$T8 will be operational b the end of '((.. $n
parallel& the national operator 5KT6 is modernising local telecommunications networks
using digital telecommunications e,uipment.
1.2. Satellite
1.2.1. $ntelsat satellites
Kazakhstan uses four $ntelsat satellites and has four earth stations in different parts of
the countr. :n $ntelsat Standard %. and an $ntelsat Standard : satellite
communications sstems have been build in :lmat. Standard %1 and Standard %'
stations have been build in the region of :tra and a Standard ) in :ktau.
1U":S:T 5Boint venture between 8ucent Technologies and K$T6 satellite network
provides video& data& video and $nternet services through $ntelsat@-(. satellite.
KU8:1 5a KT subsidiar6 satellite network utilises the e,uipment provided b )ilat0s
%ara Ka T4 HS:T and Sk :dvantage T4 5$srael6. Kulan uses an $ntelsat@-(.
satellite and operates *:4: standard.
1.2.'. =ther than $ntelsat sstems
: number of companies are operating other than $ntelsat satellite sstems. Those
include HS:T& $nmarsat and Thuraa satellite sstems. $n addition& Kazakhstan works
with some regional competitors like $ntersputnik 5ex Soviet satellite sstem6 and Turksat
5a Turkish satellite operator6. "ecentl& KT has signed an agreement with 9utelsat.
1(
The .IT0 .orthern (!rt lin'" ;etro(!5lo5"'(KZ) with Kornilo5'! (-8<).
11
Ae"tern .IT0 connect" 5i! &iber o(tic c!ble <hi'mentBK%ilor)!B,'tobeB,tir!uB-u""i!.
1'
E!"tern ;!rt will connect T!l)iKurg!nBC"tK!menogor"'B<emi(!l!tin"'B;!5lo)!rB,"t!n!B-u""i!.

T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' 1(
Section % The te0ecommnications e1ipment
8ocal production of the telecommunications e,uipment is not significant. Kazakhstan
produces mostl telephones sets& telephone exchanges& cables and wires. Several
foreign manufacturers have established a presence in Kazakhstan. #ompanies like
4otorola& 8ucent Technologies& 9ricsson& Siemens& :lcatel& 1okia& *aewoo and 1ortel
are particularl active in the countr.
8ucent Technologies has supplied a digital long@distance exchange& operating in
southern Kazakhstan.
#isco Sstems has a ! million US *ollars contract with KT0s subsidiar K:I19T to
suppl e,uipment for a national datacom network& including the installation of :T4
switches& backbone routers& and network management devices.
Section 2 The te0ecommnications ser&ices
..1. The fixed telephon services
The fixed telephon market remains under a strict control of the incumbent operator A
Kazakhtelecom 5KT6. The latter has exclusive rights for the provision of long distance
and international services. KT is also the onl operator designated b the government
to provide a number of DunprofitableE services 5or universal services6 like rural
telephon& in Kazakhstan.
The provision of services via the local telecommunications network 5local voice
telephon& fax etc.6 is considered as the natural monopol b the 1atural 4onopolies
law
1.
. :ccording to this law& the tariffs for the provision of the said services are fixed b
the government. 1owadas the KT0s market share on this segment represents !23
17
.
1evertheless& according to the government& b the end of '((1 there were about 9(
licences granted for the provision of the local telephon and '( licences for the
provision of long distance and international telephon services
12
. $n this perspective&
one can wonder whether the information provided b the government is accurate& or the
companies holding such licences are reall operating.
:s of the end of '(((& KT had '&71!&((( fixed telephone lines installed across the
countr. -F3 of those lines were being subscribed. :lmost !.3 of KT0s subscribers
5fixed telephon services6 were living in cities. *ucat 5ex Kazintel0s :rna6& another fixed
telephon provider operating in the Kazakhstan0s former capital :lmat& had some
7&((( subscribers.
1.
,rticle 4 (#) o& the .!tur!l Dono(ol/ 0!w .o 2$2B1, 0*.0$.1*++, >Ee)omo"ti ;!rl!ment!?, 1*++, .o 1#, (.
214, !men)e) b/ the 0!w o& the -e(ublic o& K!%!'h"t!n .o 2#0B2, 0#.12.2001.
17
&rom 2001 to 2002?, 4.12.2001, n@12#4.
12
&rom 2001 to 2002?, 4.12.2001, n@12#4.
$n fact& the revenues KT receives from the provision of long distance and international
telephone services are aimed to compensate the provision of unprofitable KT0s
services. :ccording to the government& the KT0s monopol for the provision of long
distance and international services has to be maintained until the 1$T8 will be build and
the universal service concept will be established. 4eanwhile& the measures from
preventing the KT0s exclusive rights violation will be reinforced in order to guarantee the
compensation of its obligation to provide Duniversal serviceE. %or instance& the
government will continue to prohibit 5to the private companies6 to provide the #all@back
and the "efile services.
..'. +ublic phone services
The densit of public pa@phones in Kazakhstan remains rather mediocre< '.! public
pa phones per 1&((( people.
KT has been the onl operator providing public pa phones since 199!. G the
beginning of '((1& there were 7&12( public pa phones installed across the countr.
Those phones use smart cards 5debit cards6. Smart cards in amounts varing from '2
to 1&72( units& can be purchased in all kiosks. =ne unit is for a minute of local calling. $t
is also possible to make international calls and calls to mobile phones.
.... 4obile telephon services
#urrentl three operators provide mobile telephon services< one analogue 5:8T986
and two )S4 5K@#ell and K:"@T986 operators. The K@#ell is the maBor mobile
telephon operator in Kazakhstan. :ltel covers :tana and :lmat along with other 11
regional centres& while )S4 network is extended to all cities with more than 2(&(((
inhabitants.
Operator Techno0o34 Estimate' tota0
Nm5er o!
S5scri5ers as
o! the en' o!
%661
Mar7et Share
)S4 Kazakhstan )S4 9(( .!(&((( F(3
K:"@T98 )S4 9(( 1'(&((( 193
G9#9T
$nternational
:4+S !(( 1.F&((( '13
Tota0 828"666 1669
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' 1'
$n Kazakhstan& the number of mobile telephon subscribers remains much lower than
the fixed line subscribers 51.! million6. The mobile telephon penetration in Kazakhstan
amounts approximatel to ..!3.
Since the establishment of two )S4 operators in 199!& :8T98 had to reduce its prices.
:s of the end of '((1& :8T98 had 1.F&((( subscribers. The compan is currentl
examining the possibilit to adopt an US:0s #*4: standard.
G the end of '((1& )S4 K:I:K;ST:1 had almost .!(&((( subscribers 5'1(&((( of
which use :#T$H prepa sstem6 and was covering 79 cities in Kazakhstan. $n '((1&
the part of value added services 5;S#S*& S4S& voice mail& information services etc.6
was at 123.K:"@T98 had 1'(&((( subscribers 57F&!(( of which were using K@#ard
prepa sstem6.
$n '(('& the government foresees the launching of a selection procedure for the *#S@
1!(( licenses. :s far as the .) mobile communication is concerned& apparentl& the
government is examining the possibilit to adopt a US standard @ 84T@'((( 5K@#*4:&
#*4:@'((6.
..7. +aging services
=n the one hand& paging operators face strong competition from mobile telephon
operators and on the other hand& the are obliged to compete between them& as man
customers constantl switch between operators in search of a better offer.
..2. Satellite services
The operators that utilise satellite infrastructure provide different telecommunications
services such as satellite earth stations& ver small aperture terminals 5HS:T6&
international private lines& mobile satellite phones& paphones& access to the $nternet
etc.
Taking into consideration its huge surface 5'&-1-&((( s, km6& small densit of
population 52.2 people per s, km6 and difficult landscape 5mountains and plains6 the
development of satellite telecommunications has a particular interest in Kazakhstan. $t
also has to be reminded that Kazakhstan has inherited 5from the Soviet Union6 an
important satellite ground infrastructure.
$n Kazakhstan& the satellite telecommunications are mainl used for the provision of
long distance and international services. The government has installed and
interconnected several earth $ntelsat stations that provide direct highwas to )erman&
United Kingdom& Switzerland& "ussia and #anada.
:ccording to the government& Kazakhstan is modernising the ground station M=rbitaN
located in :lmat. $t is also building the national satellite network that will provide
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' 1.
telecommunications services to those areas of the countr that can onl be accessed
b the means of satellite
1F
.
..F. #able and satellite broadcasting
There are one satellite and seven cable TH broadcasters in Kazakhstan. The provision
of other tpes of telecommunications services via satellite and cable along with the
digital television are still not developed enough.
The meagre development of this market can be explained b the fact that Kazakhstan
imposes a slightl distinctive authorisation procedure for the broadcasters. The
broadcasters 5terrestrial& satellite or cable6 have to obtain both the telecommunications
licence and the permission for the use of radio spectrum. The deliver of the
telecommunications licence to broadcasters implies the consultation 5of the #ommittee
on #ommunications and $nformation @ ##$6 and presumes the agreement of the
competent authorit on press and mass media
1-
.
The licence for the TH or radio broadcasters has a .@ear validit term. The permission
for the use of radio spectrum is issued for a F@month period. :fter& it can be prolonged
for another half@a@ear period. $n other words& this permission can be prolonged 2 times
5ever F months until the expir of the broadcaster0s licence6 but also can be reBected
1!
.
..-. $nternet services
%irst $S+s started operating in Kazakhstan in 1992. :mong those pioneers were Sovam
Teleport Kazinformtelecom and +arasang. $n 1999& new technologies such as %lex2FK&
:*S8& $+ Technolog were introduced. The K:+ services were introduced in '(((.
Since '(((& it is& in principle& also possible to provide Ho$+ services in Kazakhstan and
some companies& like Kazinformtelecom have been granted with a Ho$+ licence.
;owever& the government plans not to allow private companies to provide Ho$+
services until '((F.
G the end of '((1& there were about !( $S+s in Kazakhstan& but onl few 5Kazakhstan
=nline& 1ursat& :stel and )olden telecom6 had their own network. The Kazakh $S+s
had& b the beginning of '((1& more than '(&((( subscribers. G the same time there
were more than !&2(( Kazakh web sites.
1F
&rom 2001 to 2002?, 4.12.2001, n@12#4.
1-
The com(etent !uthorit/ on (re"" !n) m!"" me)i! e"t!bli"he" the (roce)ure" o& the r!)io "(ectrum )i"tribution &or
the (ur(o"e" o& TE !n) r!)io bro!)c!"ting (with the ece(tion o& c!ble TE).
1!
<ee ;!rt II, 9h!(ter 2, "ection 4, (oint 4.3 (the "!nction").
PART II THE NATIONAL TELECOMMUNICATIONS /RAME:ORK
Chapter 1 #enera0 o&er&ie;
Kazakhstan is a former Soviet Union "epublic& which gained its independence in 1991.
Until 1992& the telecommunications sector was wholl state@owned. $t was controlled
and operated b the Kazakh 4inistr of Transport and #ommunications 54T#6.
: number of private companies were allowed to enter the market since the 1992 8aw
on licences has been adopted. This law was representing a set of general rules applied
to state licensing
19
but did not take into account a number of sector specific elements
5like radio spectrum distribution6. $t has mentioned the Dcompetent organismE in charge
of delivering of telecommunications licences. 1evertheless& it did not provide
information about it. ;enceforth however& an undertaking willing to exercise activities in
the telecommunications market could& in principle& obtain a licence.
$n 199F& the government completed the 8aw on 8icences b a decree on licensing of
postal and telecommunications operators and the use of radio spectrum 5hereafter
Ddecree on licensingE6
'(
. This was a more sector specific piece of legislation dealing
exclusivel with licensing of telecommunications business activities. $t specified the
tpes of telecommunications activities that were 5ore were not6 subBect to licensing& the
rules applied to the radio fre,uencies spectrum distribution and use& the terms of
licence& the conditions attached& the rights and the obligations of the licence0s holder.
%inall& it provided information concerning the authorit competent for the issuing of
telecommunications licences& the procedure applied& the administrative fees and the
possibilities of a licence0s suspension and withdrawing.
$n 1999& the #ommunications 8aw was adopted
'1
. This law delegates all maBor polic
and regulator functions to the Dstate regulation bodE and establishes a number of
rules related to the national telecommunications operator& certification& tariff principles&
interconnection& public networks0 development etc.
Since '(((& the #ommittee on #ommunications and $nformation 5##$6& a 4inistr of
Transport and #ommunications department& has been in charge of the
telecommunications sector regulation. ##$ is responsible for the telecommunications
licensing& radio spectrum management& establishment of the interconnection and tariff
principles& as well as rules for providing international and long distance services.
19
,(!rt &rom telecommunic!tion", thi" l!w co5er" other bu"ine"" !re!" "uch !" (o"t!l "er5ice", e)uc!tion,
tr!n"(ort!tion, etc.
'(
The go5ernment6" )ecree on licen"ing o& (o"t!l !n) telecommunic!tion" o(er!tor" !n) the u"e o& r!)io
"(ectrum .o 1443, 22.11.1**#. >E'onomi'! i ;re)(rinim!tel"t5o?, 1**$, .o2. ,men)e) b/ the go5ernment
)ecree"F .o 10+1 (1$.0+.2001), .o 1##2 (3.11.2000), .o 1*3$ (20.12.1***), .o 1$+$ (22.11.1***).
'1
The 9ommunic!tion" 0!w, .o 3+2B1, 1+.02.1***, >K!%!'h"t!n"'!i! (r!5)!?, 21.02.1***.
*espite the fact that according to the government& b the end of '((1& about F((
telecommunications licences have been issued
''
& the Kazakh telecommunication
market remains under a strict control of the incumbent& Kazakhtelecom 5KT6
'.
. The
latter has the status of a uni,ue operator in charge of ensuring the development& and
management of the public telecommunications network. KT holds exclusive rights for
the provision of long distance and international services. $n addition& the state
monopolist is the onl operator in charge of providing so@called unprofitable 5or
universal6 services to the population.
The Kazakh government recognises the need to liberalise the telecommunications
market and to that end& plans to review the current regulator scheme. $n '((1& the
government presented its conception for the development of the telecommunications
sector in Kazakhstan until '((2
'7
. :ccording to this document& the government plans to
complete the liberalisation of the telecommunications market b '((2@'((F. The
liberalisation plan is composed of several laers< regulator framework reform& the
technical modernisation and the establishment of an environment open to the
concurrence. These can be resumed as follows<
The regulator
framework reform
consists of the
following elements<
establishment of a mechanism for the communications
traffic regulation 5interconnection fees& traffic
capacities& etc.6O
establishment of a universal service compensation
mechanism b the public fundsO
amendment of #ommunications 8aw& 8icences 8aw
and 1atural monopol 8awO and
creation of an independent regulator 5Canuar '((F6
The technical
modernisation aims
at<
establishment of a billing sstem for the calculation of
the local communications costO
digitalisation of the F(3 of the local
telecommunications infrastructureO
adoption of a new numbering policO
The competition
promotion issues are<
the "eview of the telecommunications tariffsO
the implementation of the universal service
compensation mechanismO
the implementation of the new licensing rulesO
implementation of the new interconnection principles&
etc.
''
&rom 2001 to 2002?, 4.12.2001, n@12#4.
'.
T!'ing into !ccount the KT )omin!nce !long with the regul!tor/ con"tr!int", mo"t o& #00 licen"ee" )o not
!((e!r re!ll/ (re"ent in the K!%!'h telecommunic!tion" m!r'et.
'7
&rom 2001 to 2002?, 4.12.2001, n@12#4.
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' 1F
Chapter % The crrent re30ator4 !rame;or7
Section 1 Re0e&ant athorities an' their competencies
1.1. The %oreign $nvestor0s #ouncil
The %oreign $nvestor0s #ouncil 5%$#6 was established in 199! to encourage foreign
investments in Kazakhstan and to provide a forum for investors and the government to
express and exchange their views with regard to investment issues in the countr. The
%$# is composed of high government0s representatives 5+rime minister& 4inister of
%oreign affairs& etc.6& the representatives of international financial institutions and the
foreign companies0 #hief 9xecutive =fficers. The %$# is chaired b the +resident of
Kazakhstan 54r.1.1azarbaev6.
The %$# can submit proposals to the +resident of Kazakhstan for the improvement of
legislation concerning investment issues and the implementation of large internationall
important investment programmes. $t can also prepare recommendations for the
improvement of the investment climate and for the strateg to attract foreign investors
into Kazakhstan0s econom. %inall& it can produce proposals for the Kazakhstan0s
economic integration into a global economic sstem.
The %$#0s meetings take place once or twice a ear. $t makes its decisions through
open voting b the simple maBorit of its members. There are four Boint working groups
within the %$# dealing with legal& tax& operational and image enhancement issues.
1.'. The #ommittee on $nvestments 5 or K:I$1H9ST6
The #ommittee on $nvestments 5or K:I$1H9ST6& the successor to the agenc of the
"epublic of Kazakhstan on $nvestment 5:"K$6 was established in '((( within the
4inistr of %oreign affairs of the "epublic of Kazakhstan. The Kazinvest0s
responsibilities include the mobilisation of the efforts to attract foreign investors
5including the financial incentives6 and the co@ordination of the state agencies0 activities
related to the implementation of investment proBects carried out b preferred investors.
1... The )overnment
The Kazakh )overnment adopts the long term polic for the development of the
telecommunications market.
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' 1-
1.7. The regulator< the #ommittee on #ommunications
and $nformation 5##$6
The #ommittee on #ommunications and $nformation 5##$6 was established in '(((& as
a 4inistr of Transport and #ommunications department& b a government0s decree 1o
1FF2
'2
.
##$ is not an independent bod< :ccording to the said decree& the ##$ is established as
a Mdepartment within the 4inistr of transport and communicationsN
'F
. The president of
##$ is appointed and revoked b the )overnment of Kazakhstan. The ##$ president
has two vice presidents appointed and revoked b the 4inister of transport and
communications
'-
. The government decides upon the maximum number of emploees
the ##$ can have
'!
. The ##$0s activities are financed b the state0s budget
'9
.
The ##$ carries out the national regulator activities in the fields of telecommunications
and postal services. :s far as the telecommunications market is concerned& ##$
participates in the elaboration of national infrastructure development programs& grants
telecommunications licences& permissions for the use of radio fre,uencies and
exercises the control over the licensees0 activities linked to the telecommunications and
the use of radio spectrum
.(
. $t establishes the rules related to the distribution of the
national telecommunications numbers and of the attribution of the Kazakh $nternet
addresses. $t las down conditions for the international telecommunications traffic and
the tariff principles.
The ##$ is also responsible for delivering of permissions for the import and the use in
Kazakhstan of electronic devices. The ##$ is responsible for the co@ordination of the
standardisation activities with the competent governmental and other organisms that
have been accredited. The ##$ grants permissions for the import of the radio electronic
devices and other telecommunications e,uipment.
The ##$ analses the statistical information provided b the telecommunications
undertakings in the light of general economic context and represents Kazakhstan in the
international =rganisations dealing with the telecommunications issues.
The government foresees the establishment of an independent regulator b '((F.
;owever& there is still no information available as far as the status& composition and
competencies of this organism are concerned.
1.2. The inter@ministerial #ommittee on radio %re,uencies
'2
The =o5ernment6" )ecree .o 1##2, 3.11.2000.
'F
,rticle 1G1 o& the )ecree .o 1##2, 3.11.2000.
'-
,rticle 4G o& the )ecree .o 1##2, 3.11.2000.
'!
,rticle 1G2 o& the )ecree .o 1##2, 3.11.2000.
'9
,rticle 1G* o& the )ecree .o 1##2, 3.11.2000.
.(
,rticle 1G2 o& the go5ernment6" )ecree on licen"ing o& (o"t!l !n) telecommunic!tion" o(er!tor" !n) the u"e o&
r!)io "(ectrum .o 1443, 22.11.1**#.
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' 1!
The $nter@4inisterial #ommittee on "adio %re,uencies 5$4#"%6 was created in 199F&
b the Kazakh government0s decree 1o 171!
.1
. $t is chaired b the 4inister of Transport
and communications. The $4#"%0s main functions are to establish a national polic
related to the distribution& the management and the use of the Kazakhstan0s radio
spectrum resources as well as the ensuring of the terminal e,uipment0s electromagnetic
compatibilit. The $4#"% represents Kazakhstan in the $nternational =rganisations
dealing with the radio spectrum issues. $t las down the basic technical standards for
the telecommunications e,uipment used in Kazakhstan.
1.F. Standardisation bodies
The Kazakh state certification framework consists of<
The central standards and certification agenc< )=SST:1*:"T 5 #ommittee on
Standardisation& 4etrolog and #ertification6. $t is the 4inistr of 9nerg& $ndustr
and Trade division. )=SST:1*:"T0s duties are as follows< participation in the
elaboration and implementation of the state polic in the area of standardisation&
metrolog and certificationO accreditation and co@ordination of the accredited
organisms0 activities& establishes Kazakh standards for products and services
produces or imported& represents Kazakhstan in international organisations dealing
with standardisation and certification issues& etc
.'
.
Some 77 centres 5as of '(((6 that have been accredited to carr out the certification
of products& technologies& works and services. $t is about legal entities of all tpes of
propert established throughout the countr. Those centres are independent from
manufactures& suppliers and consumers and can also incorporate testing
laboratories within its organisational structure.
Some '.- testing laboratories 5as of '(((6 that are independent legal entities or
structural divisions of legal entities. The testing laboratories also have to be
accredited b )=SST:1*:"T.
Goth :ccredited centres and Testing 8aboratories are entitled to issue Kazakh
conformit certificates.
Section % /orei3n in&estment
$n principle& no sectors of the Kazakh econom are closed to investors. ;owever&
sectors apart from natural resources and& in particular telecommunications sector& are
perceived b international firms as rather unattractive.
: foreigner willing to invest in Kazakhstan does not need to obtain a special permission
and moreover& there are no specific 5minimum?maximum6 foreign participation limits.
Kazakhstan does not use the GT= 5Guild@Transfer@=perate6 schemes. : foreign
investor can freel choose an appropriate structure 5representative office& a particular
legal entit or a Boint venture6 for doing business in Kazakhstan. The Kazakh legal
.1
The go5ernment6" )ecree on the interBmini"teri!l 9ommittee on -!)io :re1uencie" .o 141+, 21.11.1**#, !"
!men)e) b/ the go5ernment6" )ecree" .o 1322 (23.12.*+) !n) .o *4$ (2#.0#.00).
.'
=o5ernment6" )ecree on =H<<T,.D,-T, .o *04 o& 02.0$.2001.
sstem provides with a number of investment protection measures and several
incentives which aim at attracting foreign investment on the countr
..
.
'.1. The foreign investment legislation
%our pieces of legislation provide bases for the foreign investment in Kazakhstan<
the law on foreign investment
.7
&
the '((' Tax code
.2
&
the law on state support for direct investment
.F
& and
the law on government procurement
.-
.
These laws provide for non@expropriation& currenc convertibilit& access to international
arbitration& guarantee of stabilit in the legal regime and transparent government
procurement.
Kazakhstan does not restrict repartition of investment profits& allows full convertibilit
.!
into a usable currenc at market rates and guarantees foreign investors the right to
freel transfer income abroad.
The respect to propert rights is recognised under #onstitution& the #ivil #ode
.9
and the
'((1 8and 8aw
7(
. %oreign citizens and foreign legal entities can not permanentl own
the land
71
but ma lease it for a period starting from five up to 79 ears.
Kazakhstan offers protection to all kind of entities having foreign participation& 5including
those in which the interest of a foreign investor is at least .23 or& in monetar
e,uivalent& is at least 1 million US dollars
7'
6& foreign states and international
organisations as well as foreign citizens& stateless persons and Kazakh citizens residing
abroad& given that the are registered to conduct business activities in the countr.
..
In &!ct, !))ition!l ch!llenge" !re o&ten cre!te) b/ certi&ic!tion (roce)ure" th!t might t!'e u( to two month" in
c!"e" o& im(ort o(er!tion". It i" "trongl/ recommen)e) to (l!n &or the"e )i&&icultie" while negoti!ting ! "!le" contr!ct.
The loc!l counter(!rt h!" to be willing to (ro5i)e timel/ in&orm!tion !bout licen"ing !n) certi&ic!tion re1uirement".
It i" o&ten e&&icient to u"e (rominent cu"tom" bro'er" or (ro&e""ion!l "er5ice (ro5i)er" which c!n hel( to )e!l with
the"e t/(e" o& regul!tor/ (roblem".
.7
0!w on &oreign in5e"tment o& 2$.12.1**4 (EE<, 1**4, .o23, "t.2+0, ><o5eti K!%!'h"t!n!?, 20.01.1**2), !"
!men)e) b/ the 0!w" o& the -e(ublic o& K!%!'h"t!n .o 4##B1(02.0+.1***), .o 221B1 (22.04.1**+), .o 1#2B1
(1#.0$.1**$), .o 124B1 (11.0$.1**$), .o 112B1 (02.0#.1**$), .o 30B1 (12.0$.1**#) !n) the ;re"i)ent6" )ecree
th!t h!5e ! &orce o& the l!w .o 24++ (02.10.*2).
.2
The t! co)e .o 20*B2, 12.0#.2001, >K!%!'h"t!n"'!i! ;r!5)!?, 20.0#.2001.
.F
The l!w on "t!te "u((ort &or )irect in5e"tment .o $2B1, 2+.02.1**$ (>Ee)omo"ti ;!rl!ment!, 1**$, .o4, (.
20, !" !men)e) b/ the 0!w o& the -e(ublic o& K!%!'h"t!n .o 4##B1, 02.0+.1***.
.-
The l!w on go5ernment (rocurement .o 1#3B1, 1#.0$.1**$, >E'onomi'! i (re)(rinim!tel"t5o?, 1**+, .o 24,
(. 2, !" !men)e) b/ the 0!w" o& the -e(ublic o& K!%!'h"t!n .o 4+*B1 (2*.11.1***) !n) .o 30#B1 (0*.12.*+).
.!
In ,(ril 1***, the &ormer m!n!ge) ech!nge r!te "/"tem w!" !boli"he) b/ the .!tion!l 4!n' o& K!%!'h"t!n.
.9
The ci5il co)e (gener!l (!rt) 2$.12.1**4, >K!%!'h"t!n"'!i! (r!5)!? 12.03.2001, l!"t !men)e) b/ the l!w o&
the -e(ublic o& K!%!'h"t!n .o 2+2B2, 1$.01.2002.
7(
The l!n) l!w .o 122B2, 24.01.2001, >K!%!'h"t!n"'!i! (r!5)!?, 31.01.2001., !" !men)e) b/ the 0!w" .o
2$#B2 (24.12.2001) !n) .o 22$B2 (10.0$.2001).
71
,rticle 2$G2 o& the l!n) l!w.
7'
,rticle 4(2) o& the 1**4 In5e"tment 0!w.
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' '(
Since '((1& there have rumours about the redrafting of the 8aw on foreign investment.
The foreign business communit in Kazakhstan is concerned that this would eliminate
man benefits that foreign investors enBoed under the 1997 %oreign $nvestment 8aw&
including guarantees against changes in KazakhstanPs legislation and some customs
duties exemptions. The new law would also limit recourse to international arbitration of
investment disputes.
'.'. $nvestment incentives foreseen b the law
:ccording to the 8aw on State support for direct investment
7.
& various incentives ma
be obtained trough the #ommittee on $nvestments within the 4inistr of %oreign :ffairs&
in particular when a foreign citizen or a legal entit is willing to invest in priorit sectors
of the national econom. The list of those priorit sectors is established b the +resident
of Kazakhstan.
)enerall speaking& the investment incentives can include the State0s natural grants
5investors ma become owner of a state propert offered or benefit from state propert
rights that are transferred to the investor in a non monetar form6& up to 1((3 tax relief
for the first two to eight ears of operation on the Kazakh market
77
& as well as partial or
full customs dut exemptions on e,uipment needed for the investment.
The #ommittee on $nvestment decides on a case b case basis whether to grant or not
the said incentives. The granting is performed through the establishment of the contract
between the #ommittee and the investor. The #ommittee las down rules of procedure
to follow b an applicant which can be resumed as follows< an investor submits to the
#ommittee& along with the application demand& documents certifing that he has
sufficient financial& technical and organisation capacities to carr out its duties. The
#ommittee examines the application and informs the investor about its decision within
.( das from the submission of the demand. $f the answer is positive& the #ommittee on
$nvestment& in co@operation with the investor& draft the contract.
The investment incentive contract can be alwas denounced b the #ommittee on
$nvestments if 516 it discovers that the investor has provided the #ommittee with an
incorrect information& 5'6 the investor does not respect the conditions of the contract&
and 5.6 the investor violates the Kazakh legislation. =nce the contract is denounced b
the #ommittee& the investor can be fined and asked to return all the mone he saved
thanks to the contract.
'... 9stablishment in Kazakhstan
'...1. %reedom of structure
7.
The 0!w on <t!te "u((ort &or )irect in5e"tment, .o $2B1, 0+.02.1**$, (IEe)omo"ti ;!rl!ment!J, 1**$, .o4,
(. 20) !" !men)e) b/ the 0!w o& the -e(ublic o& K!%!'h"t!n .o 4##B1, 02.0+.1***.
77
The gr!nting o& t! incenti5e" )e(en)" on the 5olume o& the &oreign in5e"tment in5ol5e) !n) on the
con"i)er!tion (or not) o& ! gi5en in5e"tment !" !n in5e"tment in ! (riorit/ "ector o& the n!tion!l econom/.
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' '1
: foreign investor can freel choose an appropriate structure for its business in
Kazakhstan. :part from State enterprise& the following tpes of legal entities are
recognised in Kazakhstan< )eneral +artnership& 8imited partnership& 8imited 8iabilit
+artnership& :dditional 8iabilit +artnership& Coint Stock #ompan 5open or closed6 and
+roduction #o@operative. : foreign compan ma as well establish in Kazakhstan
Granches or?and representative offices.
The maBorit of foreign investors in Kazakhstan opt either for 8imited 8iabilit
+artnership 588+6 or for Coint Stock #ompan 5CS#6. These two tpes of
companies are largel used in Kazakhstan and there is no difference in the local
perception that one form has a better public image than the other.
:ccording to the Kazakh legislation
<=
& there can be two tpes of Boint stock companies
5CS#6< Dopen CS#E and Dclosed CS#E. $n contrast with closed CS#& open CS#0s
shareholders can sell their shares freel& without being obliged to receive a
consent of the rest of the stockholders.
+articipants both in 88+ and in CS# can be either individuals or legal entities. Goth
tpes of companies can consist of a single participant. ;owever& the 88+ and the
closed CS# can not have more than 1(( participants. The number of open CS# is not
restricted b the law. The 88+ and CS# participants0 liabilit is limited b the amount of
their capital contributions.
=ne of main differences between the 88+ and CS# consists in the organisation
structure of these companies. Khile the management structure of a 88+ consists of a
supreme bod 5general meetings of the participants6 and an executive bod 5for
example& the directorate6 the one of a CS# it is more elaborated. The management of
the latter includes a general meeting of shareholders& a management bod 5board of
directors
7F
6& an executive bod 5plural or sole6 and an audit commission.
: foreign legal entit ma also register in Kazakhstan& as branch or establish its
representative office. $n contrast with branch& a representative office ma not engage in
commercial activities. : branch of a foreign compan is a taxpaer in Kazakhstan.
'...'. The problems of licensing
:ccording to the 1992 8aw on "egistration of 8egal 9ntities& all legal entities created in
Kazakhstan& irrespective of the form of their incorporation and founding partners& are
subBect to state registration.
The branches and representative offices must be registered with the 4inistr of
Custice. $n order to be registered& the foreign compan shall submit to the 4inistr 516 a
cop of the articles of association of the founder& 5'6 extract from the trade register
stating the entit is a valid legal entit in its home countr& 5.6 stamped or notarised
cop of the founder0s resolution stating it is establishing a branch or a representative
office& 576 stamped regulation governing the operations of the branch or representative
72
<ee The 0!w on Joint <toc' 9om(!nie" .o 2+1B1, 10.0$.1**+.
7F
, clo"e) J<9 m!/ o(er!te without the bo!r) o& )irector". The bo!r) o& )irector"6 )utie" c!n be c!rrie) out, in
thi" c!"e, b/ the gener!l "h!rehol)er"6 meeting.
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' ''
office& 526 original power of attorne for the management and for the abilit to register
documents at the 4inistr of Custice& 5F6 the address of a branch or representative
office& and 5-6 certificate proving the pament of the stare registration fee.
8icensing has been identified as an obstacle to investment and trade facilitation. :
significant number of tpes of economic activities are subBect to licensing and there is
an extensive list of goods that are subBect to licensing in case of import or transit
through the territor of Kazakhstan. 8icensing procedures are often slow and non@
transparent representing an added cost to doing business here. There are several
government agencies that have licensing authorit.
'.7. The Kazakh government0s $nvestment priorities
The government considers the establishment and modernisation of telecommunications
network as a high priorit issue. To that end& Kazakhstan will need to invest 72( million
US *ollars within the next five ears. The foreign companies can be invited to
participate in this proBect. ;owever& as far as the rest of the telecommunications market
is concerned& the government plans to reinforce protectionist measures until the
national telecommunication network and national operators will be read to face the
international companies0 concurrence
7-
.
The government has also announced its intention to examine opportunities of the
introduction of the GT= principle& in order to attract more foreign investment into the
Transport J Telecommunications sector
7!
.
Section 2 Termina0 e1ipment
..1. $mport licenses
$n principle& as far as the telecommunications e,uipment is concerned& import licences
are not re,uired in Kazakhstan.
..'. #ustom duties
$n general& the %oreign investment law exempts from customs duties the e,uipment and
spare parts imported b foreign investor as a contribution to the charter capital
79
.
:ccording to the 8aw on State support for direct investment
2(
& imported goods
5e,uipment& raw and other materials6 benefit from a partial or total dut relief if 516 the
7-
&rom 2001 to 2002?, 4.12.2001, n@12#4.
7!
<ee the "tr!teg/ to !ttr!cting &oreign )irect in5e"tment into the Tr!n"(ort !n) Telecommunic!tion" "ector on
the web "ite o& the Dini"tr/ o& Tr!n"(ort !n) 9ommunic!tion"F www.mt'.go5.'%.
79
,rticle 22 o& the :oreign In5e"tment 0!w o& 2$.12.1**4.
2(
The l!w on <t!te "u((ort &or )irect in5e"tment, .o $2B1, 2+.02.1**$, >Ee)omo"ti ;!rl!ment!?, 1**$, .o4, (.
20. ," !men)e) b/ the l!w o& the -e(ublic o& K!%!'h"t!n .o 4##B1, 02.0+.1***.
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' '.
goods are used as investment in designed priorit sectors of the econom or 5'6 the
import of goods is related to the development of the new Kazakh capital :stana. The
Dpriorit sectorsE include& among others& the introduction of new technologies and
know@how& import of high ,ualit products and services& creation of the new Bobs& etc.
#ertain goods 5such as advertising material and some professional e,uipment6 that are
imported temporaril& ma be exempted from customs duties. Those goods can be
imported dut free onl for a one@ear period.
$n particular& except for the products in sub heading !21-.19.9(( 51(3 4%16&
Kazakhstan exempts from custom duties apparatus from ;S sub chapter !21-
59lectrical apparatus for line telephon or line telegraph& including line telephone sets
with cordless handsets and telecommunications apparatus for carrier@current line
sstems or for digital line sstemsO videophone6.
$n general& tariffs are limited. The transmission apparatus for radio@telephon& radio@
telegraph& radio broadcasting or television 5sub chapter !2'26 with the exception of
Still image video cameras
21
& also benefit from a dut free regime. The reception
apparatus for radio@telephon& radio telegraph or radio@broadcasting 5sub chapter
!2'-6 ma benefit from a (3 dut when are not considered as +ersonal radio
e,uipment. $f those apparatus are +ersonal radio e,uipment& a 1(3 dut will be
imposed.
: '(3 H:T of dut paid value ma be charged for the products of this chapter.
;owever& certain items ma be exempted from H:T.
.... Standards
:ccording to the #ommunications law& all terminal e,uipment connected to the national
telecommunications infrastructure must be certified accordingl to the Kazakhstan0s
standards. The 8aw on certification
2'
provides for the mandator and voluntar
certification. The voluntar certification is performed on the initiative of manufactures or
traders but does not substitute for mandator certification.
The products that are subBect to mandator certification include& among others< the
electric insulating materials& cables& electromechanical& radio technical& electronic
products& all means of communications& etc.
The ##$ is responsible for the co@ordination of the standardisation activities with the
competent governmental and other organisms that have been accredited and grants
permissions for the import of the radio electronic devices and other telecommunications
e,uipment.
21
<ub he!)er +222.40.100
2'
0!w on 9erti&ic!tion, .o 434B1, 1#.0$.1***.
$n order to launch the certification procedure& the applicant must present to an
accredited #enter that is specialised in certification of certain products standard
application form& customs declaration and a suppl contract or agreement. Some
additional documents can be re,uired depending on the nature of the product. :fter the
submission of those documents the testing of samples takes place. The certificate can
not be issued without the performing of the samples0 tests.
The cost of the procedure depends on the tpe of certification scheme and var from
one centre to another. $t is normall specified in an agreement concluded between the
applicant and the certification #entre.
The mark of conformit that is considered as a cop of the conformit certificate& can be
affixed to each unit of products that have been certified& close to the trademark of the
producer& on the unremovable part of the product& and in operation manuals.
:t the end of '((1& the government has pointed out that there were no standardisation
activities in progress and that the certification program for the telecommunications
services is not et prepared. The latter has also put stress on the need of establishment
of a non@governmental organism that would carr out tasks related to the development
of national standards
2.
.
Section < Esta50ishment an' operation o! te0ecommnications in!rastrctre
an' pro&ision o! ser&ices
7.1. 8icences
Since 1992& the Kazakh government grants licences to undertakings for the operation
of telecommunications infrastructure and provision of services
27
. :ccording to the 1992
8aw on 8icensing
22
& the foreign citizens and foreign companies can obtain licences on
the same basis as Kazakh entities
2F
. The ##$ is in charge of granting
telecommunications licences.
7.1.1. +rinciples
$n principle& according to the decree on licensing& a licence is designed to authorise
undertakings to perform a specific tpe of business activit. This means for example&
that a compan providing tree different telecommunications services 5such as& for
instance& mobile telephon& local telephon and paging6 has to hold tree different
licences. ;owever& a undertaking can obtain a single licence for the provision of several
2.
=o5ernment6" >9once(tion o& the K!%!'h"t!n6" telecommunic!tion" "ector )e5elo(ment &or the (erio) &rom
2001 to 2002?, 4.12.2001, n@12#4.
27
:rom .o5ember 1**# till December 2000, the go5ernment h!" gr!nte) !bout #00 telecommunic!tion"
licence".
22
The l!w on licen"ing .o 2200, 1$.04.1**2, >Ee)omo"ti Eer'ho5nogo <o5et! -e"(ubli'i K!%!'h"t!n?, 1**2,
.o 3B4, (. 3$. Thi" l!w w!" l!"t !men)e) !t the en) o& 2001.
2F
,rticle +, The l!w on licen"ing .o 2200, 1$.04.1**2, >Ee)omo"ti Eer'ho5nogo <o5et! -e"(ubli'i
K!%!'h"t!n?, 1**2, .o 3B4, (. 3$. Thi" l!w w!" l!"t !men)e) !t the en) o& 2001.
telecommunications services if those services are provided trough a uni,ue
telecommunications infrastructure which belongs to the applicant.
Khen the undertaking0s activit implies the use of radio fre,uencies& an additional 5to
the licence6 permission for the use of radio spectrum must be obtained
2-
.
7.1.'. +ublic and non public telecommunications networks
)enerall speaking& a licence has to be obtained onl for the provision of public
telecommunications services 5e.g. local& long distance and international telephon&
telegraph& telex& datacom& mobile communications& paging& lease lines& broadcasting of
television or radio programs& etc.6. The provision of non public telecommunications
services 5such as state or administration0s networks& corporate networks that are not
connected to the public telecommunications network6 is exempted from this obligation.
7.1... 8icence0s term
:ccording to the tpe of activit& the licence can be granted for 12& 1(& 2 and . ear
term. %or example& a 12@ear term licence can be obtained for the building and the
operation of telecommunications infrastructure& the provision of local& long distance and
international services& mobile telephon and datacom. Telematic network operation&
paging and leasing of national telecommunications networks are among activities for
which a 1(@ear licence can be granted. : 2@ear licence can be obtained for example&
for the provision of telematic services via local networks. %inall& a . ear licence is
granted for the provision of services such as television and radio broadcasting& among
others.
7.1.7 The conditions attached to the licence
The ##$ is of free to attach the licence0s conditions accordingl to the tpe of activit.
)enerall speaking is about sector specific conditions such as technical standards&
interconnection principles& international data traffic& etc.
:part from the conditions attached to the licenceO a licensee must respect the legislation
of the KazakhstanO publish tariffsO respect the confidentialit of communicationsO on
re,uest& provide ##$ with information linked to the relevant telecommunications
activitiesO on time perform the pament of administrative feesO permit the ##$0s
representatives to access the facilities in order to control the respect of technical
standardsO guarantee the respect of the users0 rightsO print directories of pubic network0s
connected usersO and to put its networks to the )overnment0s disposal in case of a
catastrophe.
7.1.2 The rights of the licensee
2-
<ee (oint 4.2. (-!)io <(ectrum) o& the ;!rt II, 9h!(ter 2.
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' 'F
:ccording to the decree on licensing& the licence entitles an undertaking to fix tariffs
5except from those that are regulated b the government such as e.g. international
telephon services6 for the services provided& to establish connection to the public
telecommunications network& to receive additional telecommunications licences& to
bring complaint against another licensee before the ##$& have access to all information
linked to the licence0s suspension or withdrawing.
7.1.F. +rocedure
The compan& willing to enter the telecommunications market& must submit to the ##$&
the licence demand 5specifing the tpe of activit6& a cop of state registration and the
documents certifing that the applicant is ,ualified enough
2!
. $t should be pointed out
that the licence0s demand will not be accepted b ##$ if the activities that applicant
intends to provide fall within the area of state monopol or if the applicant does not
submit a whole set of documents re,uired.
The deliver of the telecommunication licence re,uires a prior pament of the licence0s
fee& established b the government. The document proving the pament b the
operator is thus re,uired. This fee shall be paid once a ear and the ##$ shall be
provided with a cop of the pament.
$n principle& the ##$ issues the licence within one@month period from the demand0s
submission. This period can be reduced to ten das if the applicant is a S49
29
or
prolonged 5for the time period not exceeding ' month6 if ##$ decides to launch an
expertise of the applicant0s ,ualifications.
The ##$ can refuse to grant the licence if it considers that 516 the applicant is not
,ualified enough& 5'6 the applicant can not exercise such activities because of a specific
court0s Budgement
F(
& 5.6 the technical solutions proposed b the applicant are not
feasible or 576 the applicant did not paid the administrative fee re,uired.
Khen the licence is not granted within the said periods or& if the ##$ refuses to grant it&
the applicant can bring the case before a national #ourt.
7.'. "adio spectrum
:ccording to the communications law and the decree on licensing& when the
telecommunications operator0s activities impl the use of the radio fre,uencies a special
permission for the use of radio fre,uencies 5hereafter radio fre,uencies permission6
2!
In &!ct, the !((lic!nt "h!ll (ro5i)e 99I with in&orm!tion !bout the com(!n/ (n!me, org!ni"!tion!l "tructure,
number o& em(lo/ee", "ource" o& in5e"tment, "h!rehol)er", etc.) !n) the !cti5itie" it intent" to (ro5i)e in the
telecommunic!tion" m!r'et. ," &!r !" it concern" the tho"e telecommunic!tion" !cti5itie", the !((lic!nt mu"t
"ubmit in&orm!tion e(l!ining m!in technic!l element" (networ'6" c!(!cit/, t/(e o& e1ui(ment, interconnection
with (ublic networ'", 1u!lit/ "t!n)!r)", etc.), territor/ co5ere), e"tim!tion o& "er5ice"6 )em!n), etc. The 99I
c!n in5ite !n in)e(en)ent e(ert to 5eri&/ the !((lic!nt6" le5el o& 1u!li&ic!tion.
29
The K!%!'h conce(tion o& !n <DE )e"ign" !n in)i5i)u!l bu"ine"" without leg!l entit/ or !n &oun)e) leg!l
entit/ em(lo/ing le"" th!n 20 wor'er" !n) the !nnu!l turno5er not ecee)ing, !((roim!tel/ 20 million Tenge
(3$#,000 Euro).
F(
Thi" me!n" th!t ! n!tion!l court (rohibite) the gi5en un)ert!'ing to eerci"e the concerne) !cti5itie".
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' '-
shall be granted b ##$ after consultations with the $nter@ministerial #ommittee on radio
fre,uencies 5$4#"%6. This radio fre,uencies permission is a supplement to the
telecommunications licence. $t means that an operator must first receive a
telecommunications licence before appling for the radio fre,uencies licence. Khen
onl one fre,uenc is needed& the ##$ can grant& at the same time& radio fre,uencies
permission and the telecommunications licence.
The licences for the use of radio fre,uencies are granted onl on the basis of a
selection procedure or an auction. The decision on the launching of a selection
procedure or auction is taken b the ##$ on the basis of the $4#"%0s decisions. The
licensee has to provide the ##$ with the documents issued b a sanitar authorit
certifing the possibilit of installing radio electronic network devices in a given place.
$f the licensee0s activities are about providing TH or radio services using the radio
fre,uencies& the competent authorit on press and mass media must be consulted. The
later establishes the procedures of the radio spectrum distribution for the purposes of
TH and radio broadcasting 5with the exception of cable TH6.
The deliver of the radio fre,uencies permission re,uires a prior pament of a fee after
the selection procedure or auction takes place. The document proving the pament b
the operator is re,uired. The radio fre,uencies permission is delivered for a six month
period. This period can be regularl prolonged until the term of expir of a
corresponding telecommunications licence.
The government plans to prepare a new conception for the distribution and the use of
radio fre,uencies taking into consideration the need to ensure an ade,uate distribution
of the radio spectrum0s resources among the public and private sectors. $t also foresees
to review tariffs for the radio spectrum use as well as the creation of an efficient control
mechanism.
7... The sanctions
:ccording to decree on licensing the telecommunications licence 5including a radio
fre,uencies permission
F1
6 can be sspen'e' for a time period not exceeding six
months if the undertaking 516 within . month 5from the licence0s deliver6 does not start
to exercise its activities& 5'6 has an overdue pament of administrative fees& 5.6 has
provided ##$ with a non@correct information about the services0 ,ualit standards& 576
do not respect the technical re,uirements or services0 ,ualit standards& 526 violates the
licence0s conditions or 5F6 refuses to provide necessar information to the ##$.
The ##$ can sspen' the licence for the period not exceeding six month. ;owever&
when a telecommunications licensee is a S49& its licence can be suspended b the
#ourt0s decision. $n exceptional circumstances& the ##$ can suspend a S490s licence
for . das maximum and anwa must bring the affair before the #ourt. $n this case& the
suspension remains valid until the #ourt0s decision. :fter the licensee undertakes
F1
The 99I c!n "u"(en) ! r!)io &re1uencie" (ermi""ion i& (1) the licen"ee u"e" other &re1uencie" th!n tho"e
"(eci&ie) in the licenceK (2) the licen"ee )oe" not (er&orm the (!/ment &or the u"e o& r!)io &re1uencie" within the
(erio) "(eci&ie)K (3) tr!n"&er" the u"e o& it" r!)io &re1uencie" to other"K !n) (4) the licen"ee6" )e5ice" inter&ere
with other communic!tion" "/"tem".
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' '!
actions remeding to the reasons wh the licence was suspended& the licence becomes
valid again. : licensee& if considers that the licence0s suspension was unBust& can bring
the affair before a #ourt
The telecommunications licence can be ;ith'ra;n b the court0s decision if 516 the
licensee exercises other activities that those the licence was issued for& 5'6 violates the
anti monopol legislation when a competent organism decides so& 5.6 the licence was
previousl suspended and the licensee fails to perform actions re,uired b the ##$O and
576 the licensee has transferred its licence to a third art.
7.7. The changes envisaged b the government
8icensing is viewed b the government as an important element of the national polic of
the telecommunications sector liberalisation. $t plans to reinforce the economic
sanctions 5suspension of licences& administrative fines6 and to redefine the licensing
mechanisms 5deliver& suspension of the licences6. The government0s proBect
distinguishes three tpes of telecommunications licences<
%$"ST T>+9 of licence would be granted for the provision of telecommunications
services re,uiring the use of radio fre,uencies or universal telecommunications
services. This licence can be granted for the provision of voice telephon services& data
transmission over fixed networks& mobile and satellite communications& among others.
=perators must obtain a licence from a competent organism
F'
in order to provide such
services.
S9#=1* T>+9 of licence would be granted for the provision of telecommunications
services b the operators that have their own or lease networks or telecommunications
lines 5for example& an $S+ services6. $n this case a simple undertaking0s registration
would be re,uired.
T;$"* T>+9 is designed to cover the activities of dealers or distributors of other
telecommunications networks and services providers 5telecommunications licensees
1o1 or 1o'6. The relationships between those undertakings 5is governed b the
agreements the establish.
$n addition& the government is willing to develop a national conception for the radio
spectrum and telecommunications numbers management. There should also be
established an efficient mechanism of state control
F.
.
Section = Access an' interconnection
2.1. The present situation
F'
The go5ernment i" currentl/ e!mining the e"t!bli"hment o& !n In)e(en)ent regul!tor &or the
telecommunic!tion" m!r'et.
F.
2001 to 2002?, 4.12.2001, n@12#4.
$n order to guarantee the coherent and functional interconnection between the
telecommunications networks in Kazakhstan& the ##$ establishes rules for the co@
operation between the telecommunications operators and the sstems of the technical
management of the interconnected networks 5including pricing schemes and traffic
capacities6
F7
.
:ccording to the #ommunications 8aw& governmental and private networks can be
used for the provision of telecommunications services to the general public when the
owner of this network receives a telecommunications licence. Undertakings can create
their own telecommunications networks. 1etworks used for the TH or radio
broadcasting are considered to be an integral part of the Kazakhstan national
telecommunications network. #ommercial broadcasters can create and use their own
networks or lease it from the state owned operators. The governmental 5president&
ministries& defence and police6 networks are provided b a special organism designed
b the +resident of Kazakhstan on the basis of special networks. The operators must
view the provision of lines for the governmental purposes as a priorit and can cut those
lines onl after a #ourt0s Budgement.
2.'. The new proposals
The new government initiative foresees to review interconnection principles
F2
. %irst& the
undertakings having a significant market power should be obliged to provide access to
its networks to other operators accordingl to the uniform& transparent and non
discriminator rules. Technical capacities& conditions and delas will be established b
independent organisations& mandated b a regulator authorit. The interconnection
tariffs must be calculated onl
FF
on the basis of traffic carried. The government foresees
that b '((. this mechanism can be launched.
Section 8 Access to properties an' ri3hts o! ;a4
:ccording to the #ommunications law& when installing networks& the
telecommunications operators can have access to properties 5state or private6 on the
basis of agreements established with the propert0s owner or with a local executive
authorit& if the propert0s belongs to the State. The operators and propert0s owner are
free to decide upon the conditions and terms of these agreements.
There are no new government0s proposals as far as the access to properties and rights
of wa are concerned.
Section > - Nm5erin3
F7
The =o5ernment6" )ecree on the 99I, .o 1##2, 3.11.2000.
F2
2001 to 2002?, 4.12.2001, n@12#4.
FF
9urrentl/, !n o(er!tor c!n ch!rge "(eci!l &ee &or the !cce"" o& ! concurrent to it" networ'.
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' .(
Kazakhstan belongs to the international zone 1o-. :ccording to the government0s
decree 1o 1FF2& the ##$ is responsible for the distribution of the national numbering
resources.
$n the context of the telecommunications regulator framework reform& the )overnment
plans to elaborate a new national numbering plan
F-
. :ccording to the )overnment& this
new plan shall contribute to the stable development of the competition and reflect both
state and private operators0 interests.
Section ? Uni&ersa0 ser&ice
!.1. The present situation
:ccording to the 1999 #ommunications law& the incumbent operator has the obligation
to provide a minimum set of telecommunications services accessible 5as well as the
prices of those services are concerned6 to the public. The ,ualit re,uirements and the
list of those services are established b the ##$. The compensation of the Duniversal
serviceE obligations is dependent on the revenues coming from the exercise b the
incumbent operator of its exclusive rights 5long distance and international telephon6.
:ccording to the government& at the end of '((1& there were about '((( Kazakh towns
that were not benefiting from those universal services.
The government considers that the liberalisation of the telecommunications market will
be dependent upon the review of the universal service concept and the establishment
of a due compensation mechanism. $n other words& the incumbent0s exclusive rights will
be withdrawn onl when the new compensation mechanism is established.
%or the period '((1@'((2& the government has established a following minimal set of
Duniversal serviceE obligations that should be available at an Kazakh town which has
more than '(( inhabitants
F!
<
T4pe o! ser&ice Content
:ccess 1.
'.
Hoice telephon over the public
telecommunications network
: subscriber0s line must provide at least a
9&F KGit connection.
#ompulsor provision of services< 1.
'.
..
The possibilit to call 5free of charge6 an
urgenc number.
=perator0s assistance
*irector service
F-
2001 to 2002?, 4.12.2001, n@12#4.
F!
It "houl) be !""e""e) th!t the (rim!r/ go!l o& the go5ernment i" to e"t!bli"h (ublic centre" (in the town" th!t
h!5e more th!n 200 inh!bit!nt") where citi%en" c!n bene&it &rom the uni5er"!l "er5ice".
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' .1
$t is estimated that a F( million US *ollars investment will be re,uired in order to reach
this level of the universal services provision across the countr and the incumbent0s
compensation will amount to .( million US *ollars per ear.
!.'. The new proposals
:ccordingl to the Kazakh government& there is a need to elaborate a due
compensation mechanism in order to enable the share of the universal service
obligations between the telecommunications operators. The ##$ will have a dut to
conceive this mechanism and to establish a minimal set of universal service obligations
of a certain ,ualit.
The scope of the universal service obligations must be revised in the light of the rapidl
changing technological environment.
Section @ Pricin3 princip0es
$n principle& according to the #ommunications 8aw& the telecommunications operators
must establish tariffs in accordance with the Kazakh legislation. The incumbent0s tariffs
are regulated b an authorit dealing with competition and natural monopol issues.
The calling of an emergenc services has to be free of charge independentl of the
operator contracted.
$n practice& the prices for the telecommunications services are fixed b the state&
represented b the ##$.
Section 16 Pri&ac4" 'ata protection an' consmer protection
The article 1! Q ' of the #onstitution guarantees to ever Kazakh citizen the right for the
confidentialit of phone conversations and other communications. $n some cases
however 5when provided b a specific law6& this right can be limited b the State.
The #ommunications law guarantees the protection of the user0s rights in relation to the
confidentialit of the communications done via the telecommunications networks and
post. The operators are responsible in case the fail to guarantee the respect of the
confidentialit.
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' .'
$t is estimated that a F( million US *ollars 5F! million 9uros6 investment will be re,uired
in order to reach this level of the universal services provision across the countr and the
incumbent0s compensation will amount to .( million US *ollars 5.7 million 9uros6 per
ear.
Section 11 The competition pro&isions
$n principle& several pieces of Kazakh legislation& both general 5e.g. #ompetition 8aw6
and sector specific texts 5e.g. #ommunications 8aw6& deal with anti monopol issues.
1evertheless& several exceptions impede the accurate implementation of the said
principles in the telecommunications sector.
11.1. The #ompetition 8aw
The #ompetition 8aw
F9
establishes the national anti@monopol organisational
framework& composed of the central anti@monopol authorit and its local divisions&
describes its tasks and competencies. The 8aw also addresses issues related to the
definition of market dominance& the state control over dominant undertakings and
market mergers& the responsibilities of operators& the right of appeal against the
competent anti@monopol authorit0s decision& etc.
:ccording to this 8aw& the :nti 4onopol :uthorit 5:4:6 has the dut& among others&
of promoting the free pla of competitionO taking ade,uate measures in order to prevent
and limit the monopolistic behaviour and abuse of a dominant position& exercising
control over dominant operator0s activities and those undertakings which activities are
conceived as natural monopol
-(
.
Thus& an operator can be considered as dominant if its market share on a relevant
product or service market is over a certain level. This level is established ever ear b
F9
The 0!w on 9om(etition !n) limiting o& the mono(oli"t !cti5itie", .o 144BII, 1*.01.2001, IK!%!'h"t!n"'!i!
(r!5)!J, 22.01.2001.
-(
Hne "houl) remin) th!t the I(ro5i"ion o& telecommunic!tion" "er5ice" 5i! the loc!l telecommunic!tion"
networ'J i" con"i)ere) !" n!tur!l mono(ol/ b/ the .!tur!l Dono(olie" 0!w. It me!n" in (!rticul!r, th!t the ,nti
Dono(ol/ ,uthorit/L.!tur!l Dono(ol/ ,uthorit/ e"t!bli"he" t!ri&&" (com(ul"or/) &or the (ro5i"ion o& the "!i)
"er5ice".
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' ..
the :4: but can not be under .23
-1
. The :4: carries out the market analsis
procedure 5according to the rules established b itself6 and designates the dominant
undertakings.
The designated dominant operators shall provide the :4: with information related to
516 the results of its business activitiesO 5'6 distribution of its shares& and 5.6 tariffs&
production volumes and profitabilit of its activities. Those companies are obliged to
notif the :4: about the planned increase of its tariffs and shall Bustif this
augmentation. The dominant operators can not abuse of its dominant position< e.g. fix
extremel high or extremel low tariffs& create conditions impeding the access to the
market of new operators& reduce the amount of production in order to create a deficit of
products or services& etc.
The :4: has to give its authorisation for a purchase of more than '(3 of the dominant
undertaking0s shares 5that give to the buer the right to vote6 b a person or a legal
entit 5national or foreign6.
The #ompetition 8aw also forbids those market mergers or agreements between
enterprises that would result in the controlling of more than .23 of the relevant market
b the said enterprises and if those mergers or agreements aim at impeding a free pla
of competition.
$t should be assessed that the #ompetition 8aw does not cover the area of the
exclusive rights 5article 'Q'6. $n this context& one should remind that the Kazakhtelecom
5KT6 has been granted with exclusive rights for the provision of the long distance and
international telecommunications services. $n other words& the KT0s exclusive provision
of these services can not be considered as violating the #ompetition 8aw. #onsidering
the state of development of the market& there was thus no decision taken b the
competition authorities regarding telecommunications.
11.'. The #ommunications and 8icences laws
:rticle 7Q7 of the #ommunications law states that the activities in the area of
communications must respect& among others& the principle of a fair competition. The
"egulator must promote the fair competition among operators providing
communications services 5article 2QF6.
The 8aw on 8icences& provides that the granting of licences b the state shall respect
the principle of non discrimination. $n particular& the article .Q1 forbids& while granting
licences& to reserve a priorit treatment to the state enterprises except for the activities
that are considered as State monopol. %urther& the same article prohibits the granting
of licences with the aim of limiting the competition and the offering of special privileges
to a particular undertaking. The licensing must not strengthen the monopolistic
behaviour of operators nor it must limit the freedom of business activities 5article .Q.6.
$n addition& according to the decree on licences 5article -6& the telecommunications
licence can be withdrawn if the licensee violates the Kazakh anti@monopol legislation.
-1
Two or three un)ert!'ing" c!n 7ointl/ be con"i)ere) !" )omin!nt i& the/ control together !t le!"t 203 (two
un)ert!'ing") or $03 (three un)ert!'ing") o& the rele5!nt m!r'et.
PART III #ATS COMMITMENTS AN+ .ILATERAL A#REEMENTS
$t should be noticed that accordingl to the Kazakh #onstitution& the $nternational
treaties have a priorit over national legislation and have a direct effect.
Chapter 1 The #ATS commitments
Kazakhstan has an =bserver status within KT=. Kazakhstan0s Korking +art was
established in %ebruar 199F. The first round of KT= accession negotiations took place
in 199-. ;owever& the Kazakh initial offer in goods and services was considered as
inade,uate. $n addition& Kazakhstan failed to submit a number of documents to the
KT= Secretariat as programmed. $t can be assessed that the neighbouring Krgzstan
and #hina accession& together with "ussia0s efforts to Boin KT= can give Kazakhstan
an incentive to move more ,uickl.
Chapter % - The EU A KaBa7hstan 5i0atera0 a3reements
The +artnership and #o@operation agreement 5+#:6 was signed on '. Canuar 1992. $t
entered into force on 1 Cul 1999. The agreement will remain in effect for initial period of
ten ears. The +#: replaced and expanded the :greement on Trade& 9conomic and
commercial #o@operation signed in 19!9 between the #ommission and the former
Soviet Union.
$n commercial terms& the +#: establishes the principle of non discrimination&
elimination of trade ,uotas& 4%1 treatment at borders& prohibition of current paments
and direct capital movements blocking. The $+ rights owners benefit from an e,uivalent
legal protection.
:s far as the telecommunications sector is concerned& the +#: 5art. 2-6 provides that
the +arties shall expand and strengthen co@operation in the establishment policies& tariff
principles& the development of proBects attracting investments& the efficienc and ,ualit
of the telecom services& the establishment of an appropriate regulator framework& etc.
PART IC - LE#AL ANAL$SIS" SOLUTIONS OR RECOMMEN+ATIONS
$n spite of numerous solicitations of the 9U enterprises& there was no complaint of the
9U telecommunications producers or operators regarding the market access in
Kazakhstan. $t must thus be assumed either that there are no problems presentl or
that the 9U enterprises prefer to deal with the existing problems in an informal wa.
Chapter 1 The 3enera0 a5sence o! comp0aints
The reported market access difficulties of 9U telecommunications enterprises in
Kazakhstan seem to be ver limited. 1o operator mentioned a precise obstacle.
*ifferent factors explain this result. %irst of all& the regulator context remains uncertain.
The market obviousl presents interesting perspectives. The restructuration of the
econom has engendered a strong demand for telecommunications services. Second&
the opening of the market remains ,uite limited. Some companies also prefer obviousl
to negotiate directl with the authorities without the intervention of third authorities.
%inall& the presence of 9U operators remains limited. $t is noticeable that foreign
investors in the mobile sector& which offers the strongest growth potential& are Turkish.
Chapter % The potentia0 pro50ems
Section 1 - The in'epen'ence o! the re30ator
$n the perspective of the next ears& the present status of the regulator must certainl be
considered as a potential problem. The control of the government is ver heav& and in
the present context of the market& this offers ver little leewa for an autonomous
regulation.
Section % - The ni&ersa0 ser&ice
$t must be noticed that the present government ver explicitl links the opening of the
market to the establishment of a financial instrument meant to finance the universal
service. This could become a strong impediment in the arrival of new competitors.
T989#=4S 4:"K9T :##9SS STU*> ? ;9":@#99$ ? Kazakhstan A (!?'((' .F

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