Fitch upgrades Kaztel

Fitch Ratings said it upgraded Kazakhtelecom JSC's (Kaztel) long-term issuer default rating to BB+ from BB.

The outlook is stable.

Kaztel is a strong fixed-line incumbent with dominant market shares in traditional telephony and fixed-line broadband services, operating in a benign regulatory environment, Fitch said.

The company created a mobile venture with Tele2 that gained a 25% subscriber market share and is on track to improving its profitability on the back of a larger scale and post-integration synergies, the agency said.

Kaztel's funds from operations adjusted net leverage is low and unlikely to spike higher than 2x on the expected acquisition of Tele2's stake in the mobile joint venture in 2019, Fitch said.

The agency said it expects Kaztel to maintain its leading position in the fixed-line segment, helped by benign regulation and a shortage of alternative networks.

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