Perhaps, we can start
talking about Kyrgyz Telecom, the role it plays
within the mass communication sector here in Kyrgyzstan.
Perhaps, you can give us an idea of a current structure
of this enterprise.
I should tell from the beginning that I am a
new person at Kyrgyz Telecom. Before that, I was
working as a president of airport Manas and also
I was working in Bitel Company. So, statements
given by me about Kyrgyz Telecom might be not
correct, as I am a new person here. It is my personal
opinion.
So, as you know Kyrgyz Telecom is now a joint-stock
company. Private people own about ten percent
of the shares and the rest belongs to the government.
Seventy six percent belongs to state property
fund and fourteen percent also to the government.
Because it is a joint-stock company it has a standard
cooperative structure -a meeting of holders, a
board of directors, management etc. As this company
is considered to be a strategic object president
recommends the number of directors and managers.
Also, by the recommendation of the World Bank
this company is an object of privatization. A
deadline of privatization is the end of this year,
but I think that it is unreal to do it in such
period of time. As I estimate it could be accomplished
in the middle of May only if we find an investor.
As to privatization and the conditions laid
down by the World Bank, it is my understanding
that the World Bank has requested Kyrgyz Telecom
rethinks its monopolistic role within a mass communication
sector. If all the credits and loans given by
the World Bank to Kyrgyz Telecom are repaid and
one-step down than privatization can proceed.
Is this really a case and is it really towards
limiting or retarding the privatization process?
Kyrgyz Telecom had previously and it has until
now an exclusive right to provide international
calls. It is just an exclusive right, but I would
not say a monopoly. We were supposed to have this
right until year 2008, but just recently this
date was changed to the year 2003. Thus, we have
only three months left. Actually, it is an agreement
of the European Bank and the World Bank. I think
that for Kyrgyz Telecom this situation is normal.
We have high tariffs on the international calls
and at the account of this income we support unprofitable
local calls. When we lose this exclusive right
we will be able to make the tariffs for the local
calls higher. It is a chance for Kyrgyz Telecom
to approach market principles. Nowadays, you can
see that the tariffs for local calls are very
low. For example, the subscription fee for the
local phone line is only eighty cents. Also, we
cannot use time tariffs. It results to the overload
of phone lines at evenings. Thus, this monopoly
leads us to such outcomes.
In terms of your income, could you please
use a rough idea what is a year turn over of Kyrgyz
Telecom?
There are two types of the international calls.
They are the calls to CIS and abroad. The income
made from the calls abroad is about two million
dollars. The total turn over of the company is
thirty million dollars. So, it means that when
we stop being a monopoly we would not lose much.
In terms of telegrams and penetration Kyrgyzstan
has only 7.519 per 100 inhabitants, which is roughly
half of the penetration rate of other regions
such as Russia, Kazakhstan, Belarus, and Ukraine.
You have to install 475,066-kilometer lines and
only 356,800 are utilized. Why is a network unutilized?
Is it because of the lack of funding or any other
reason?
As to rural area it has to do with the inhabitants
themselves. They don't need phone lines. As to
urban area the percentage of using phone lines
is about 95 percent. Five percent are not used
perhaps because it is expensive for some people
to install a cable. For Kyrgyz Telecom it is not
really profitable to install cables for new subscribers.
We can do it only for the rich organizations,
may be for the international ones.
What about a foreign investor joining Kyrgyz
Telecom? What process has to take place so that
this can happen? You have mentioned that Kyrgyz
Telecom can be privatized by May. Why don't you
have this investor?
First of all, it is a situation in the world. Four
years ago when a privatization process was undertaken
the government would ask 150 million dollars for
its forty percent. There were real proposals made
to buy it for 90 million dollars. It was a time
when tariffs were growing and an interest of western
countries was very high. Nowadays, we have a crisis
in telecommunication in Western Europe. That is
why we have to do deal with our problems by ourselves.
Also, economy is not strong in Kyrgyzstan and the
foreign investor would invest only if he can be
sure that he will get the return. The third reason
is that a very heavy social load lays on Kyrgyz
Telecom. If the investor comes and wants to increase
the tariffs ten times he would be prohibited to
do so. However, I think that Kyrgyzstan is democratic
in terms of money policies. You can bring as much
money as you want and take money as much as you
want and nobody checks this. |
Do you think that
perhaps, these very large telecommunication enterprises
such as Deutsche Telecom or French Telecom and others
are looking for new markets such as the one in Kyrgyzstan,
where they could easily set up infrastructure and
gain a market. Do you think that this is something
you can market or profit from in terms of foreign
investors?
There were many attempts in CIS countries to privatize
telecommunications and it was done in more interesting
countries than Kyrgyzstan in terms of a degree of
economic development but they all were not successful.
For example, DEO in Kazakhstan asked to give them
back their thirty percent of shares and in two years
they began having problems. Soros has bought 25
percent of "Svyaz Invest" in Russia and
now he is very sorry about that. He bought this
for one billion two hundred million dollars. In
Ukraine, they try to sell it during five years already.
However, I think that a situation in Kyrgyzstan
is quite different. You have installed only fifty
percent of lines in rural areas and the majority
of the network is still analogized and has not been
digitalized. Comparing to digitalizing, it opens
up a number of new opportunities for investors.
There is Internet and other services that company
could provide. What do you think of that?
I agree that there are many possibilities to develop
this sector. However, the problem is that even if
we do everything, who would consume it? For example,
abroad was a big expectation of the consumption
of the third generation mobile phones and the telecommunication
companies paid five-six billion dollars for licenses
to provide this service. Two and a half years have
passed and only now they start making profit. They
expected that people would even watch football on
their mobiles but people just use TV. Here, in Kyrgyzstan,
everything depends on the development of the economy.
Well, you have worked with Bitel and you have
probably weakness yourself with the growth of and
success of Bitel's services doesn't this prove that
there are possibilities?
The situation with Bitel is such that the number
of subscribers is increasing, but the profit per
one consumer is decreasing. Before the prepared
cards were introduced, a potential user of a mobile
phone had to spend minimum 250 dollars a year. Nowadays,
when we have prepared cards, a person who uses a
mobile phone spends about 60 dollars. These cards
made the mobile phones available to people and the
number of users increased. Well, a user of Kyrgyz
Telecom pays 20-40 soms a month and nothing else.
If we want we would provide a phone line to every
family in Bishkek and we would get 50 soms more
from each family. Thus, we have no problems with
the increasing a number of users but it is not profitable
for us.
How would you like to see Kyrgyz Telecom during
your time? Do you think you will find an investor?
Perhaps, a certain percentage of the government-owned
share could be divested and what will be the outcome
of the privatization of Kyrgyz Telecom?
I think that is a situation we have now. We want
to sell 51 percent of shares and leave 39 percent
to the government. Moreover, I am sure that here
should not be a question of price. It is more important
that an investor has a good reputation, good experience
so that Kyrgyz Telecom will be well developed. Actually,
I would sell it for nothing but with one condition.
This company has to develop Kyrgyz Telecom to a
highest extent and than these 39 percent that belong
to government will rise in price.
Speaking about Kyrgyzstan and foreign investors,
could you please tell us your opnion on the investing
climate here?
I cannot be objective speaking about this issue
because I personally have not faced this issue.
I have heard that we have good laws but there are
bureaucrats who make these laws not so good. I mean
these laws are not nicely implemented. Nowadays,
Mr. Otorbaev starts dealing with this issue. They
start developing a matrix of actions in order to
overcome different problems, which the investors
face. There is also a special department where you
can come and get all the information you need. It
seems that the situation is normal now, but it might
aggravate later on.
Perhaps, you could tell us little bit about your
past and your experience. You have mentioned that
you had worked with Bitel and you have also been
a director of National Airport Manas. Could you
tell us about your professional career and what
would you like to achieve while heading Kyrgyz Telecom?
I graduated from Moscow Engineer- Physical Institute
in 1985. In 1992 I graduated from Moscow Institute
of Management and I defended my candidate degree.
After that I mainly had to deal with financial papers
In Bitel I started my activity as a financial director,
then I became a general director of Bitel. After
that I became a financial director of Kyrgyz Airlines,
Aba-Joldoru, and then I was appointed as a general
director. As I came to Kyrgyz Telecom I was appointed
as a general director right away skipping a position
of a financial director. Kyrgyz Telecom is a good
company as the previous leaders had done a good
job. However, a technocratic approach is not prevailing.
For example, they first started creating a new station
and then making marketing. I think it should be
the other way around. So, I think that a system
should be corrected. There is one more problem.
Kyrgyz Telecom is always on the condition of being
privatized. That is why people working here cannot
make long-term business plans. When I just came
here I said, that if we work here only one month
we should work here, as we are to work here twenty
years. We should not just wait when investor comes.
If he comes it would be good for him to continue
our job.
Thank you for the interview. |
Mr. Nasirdin
Sh. Turdaliev