KCEL.L Regulatory News (KCEL)

Kcell JSC

Results for January - March 2013.

Almaty, April 19, 2013 - Kcell Joint Stock Company ("Kcell" or the "Company") (LSE, KASE: KCEL), the leading provider of mobile telecommunications services in Kazakhstan by market share in terms of revenue and subscribers, announces its unaudited results for the first quarter of 2013.

First quarter

·; Revenue increased 4.0 percent to KZT 43,053 million (41,397).

·; EBITDA, excluding non-recurring items, increased 1.2 percent to KZT 23,728 million (23,454). The EBITDA margin decreased to 55.1 percent (56.7).

·; Operating income, excluding non-recurring items, increased 2.1 percent to KZT 17,956 million (17,590).

·; Net income increased 2.5 percent to KZT 13,656 million (13,325).

·; Free cash flow decreased to KZT 11,026 million (15,227).

·; During the quarter the subscriber base increased by 310,000 to 13.8 million.

Financial highlights

Comments by Veysel Aral, CEO

"During the first quarter of 2013 we continued to deliver superior profitability despite the challenges we faced. The EBITDA margin remained above 55 percent for the quarter due to our continuous focus on cost efficiency. Our subscriber base increased by 310,000 and reached a level of 13.8 million subscribers. Overall, we continue to retain our strong leadership in the Kazakh mobile telecom market.

Kcell is best placed to benefit from the significant growth potential for mobile data services in Kazakhstan. Rapid growth of revenue associated with data services has demonstrated the continued importance of our strategic emphasis on the development of data services.

In line with our plan, which we announced at the time of the IPO last year, we intend to pay a special dividend equivalent to 100 percent of the net income for the period of July 1, 2012 to December 31, 2012, totaling to KZT 32,403 million. The payment will be made not later than June 30, 2013."

Conference call

Kcell will host an analyst conference call on April 19, 2013 at 11:00 UK time / 16:00 Almaty / 14:00 Moscow. Dial in details are as follows:

A replay of the call will be available until April 26, 2013 using the following details:

A presentation will be available on the Company website shortly before the conference call on www.investors.kcell.kz./en

Enquiries:

Review of the first quarter 2013

Revenue

Revenue increased 4.0 percentto KZT 43,053 million (41,397).

Revenue from voice services increased 1.1 percent to KZT 33,289 million (32,919). Data revenue increased 37.9 percent to KZT 5,672 million (4,112), revenue from value-added services increased 1.7 percent to KZT 3,923 million (3,858). Other revenue decreased 66.8 percent to KZT 168 million (508).

Voice service revenue

Revenue from voice services increased 1.1 percent to KZT 33,289 million (32,919). Voice traffic increased 13.8 percent to 5,524 million minutes as a result of an increase in the subscriber base to 13.8 million (11.2). However, growth in traffic and in the number of subscribers was partially offset by a decrease in tariffs, which caused ARMU to decrease to KZT 4.7 (5.3).

Data service revenue

Data revenue increased 37.9 percent to KZT 5,672 million (4,112). Data traffic increased 120.6 percent to 3,104,833 GB (1,407,282). Growth in data traffic was partially offset by offering of packages with lower tariffs per MB, which led to a decrease in average revenue per MB (ARMB) to KZT 2.9 (2.1) but led to an increase in data ARPU to KZT 139 (124).

Value-added service revenue

Revenue from value-added services increased 1.7 percent to KZT 3,923 million (3,858). The increase was primarily due to an increase in revenue from the provision of content services, such as ring back tones and other information and entertainment services, up 4.3 percent to KZT 2,143 million (2,056).

Other revenue

Other revenue decreased 66.8 percent to KZT 168 million (508). The decrease was primarily attributable to the decrease in sales of handsets and USB modems.

EXPENSES

Cost of sales

Cost of sales increased by 2.7 percent to KZT 18,627 million (18,138) primarily due to an increase in interconnect fees and expenses to KZT 5,469 million (5,216), as well as an increase in site rent expenses and maintenance expenses due to an increase in number of base stations.

Selling and marketing expenses

Selling and marketing expenses increased by 15.7 percent to KZT 3,896 million (3,366). The increase is attributable to an increase in advertising and sales promotion expenses to KZT 772 million (602).

The increase is also attributable to an increase of cash collection commissions to KZT 1,719 million (1,489) due to subscribers increasingly using electronic payment terminals instead of scratch cards to top up their account balances.

General and administrative expenses

General and administrative expenses decreased by 24.3 percent to KZT 2,641million (3,487) primarily due to a decrease in consulting expenses of KZT 1,038 million related to the Offering.

EARNINGS, FINANCIAL POSITION AND CASH FLOW

EBITDA, excluding non-recurring items, increased 1.2 percent to KZT 23,728 million (23,454). The EBITDA margin is 55.1 percent (56.7).

Financial items totaled KZT -612 million (39) related to net interest expenses in Q1 2013 and net interest income in Q1 2012.

Income tax expense increased by 12.8 percent to KZT 3,688 million (3,269). The increase in the income tax expense was primarily attributable to an increase in taxable income.

Net income attributable to owners of the parent company increased by 2.5 percent to KZT 13,656 million (13,325) and earnings per share increased by 2.5 percent to KZT 68.3 (66.6).

CAPEXincreased to KZT 5,274 million (2,763) and the CAPEX-to-sales ratio increase to 12.3 percent (6.7).

Free cash flow decreased to KZT 11,026 million (15,227), primarily due to an increase in capital expenditure and changes to working capital as the proportion of accounts receivable decreased and accounts payable increased. This was offset by recognition of cash balances decided to be held in bank deposits to earn interest before paying dividends as current account receivables.

Net debt/equity ratio was 53.4 percent (69.4).

The equity/assets ratio was 52.0 percent (44.2). The drop is explained by dividends paid during the first quarter 2012 and there were no any payments made during the first quarter 2013.

Key Milestones 2013

January: Based on the decision of the Committee on Indices and Securities Valuation of January 10, 2013 common shares KZ1C59150017 (KZ1C00000876, KASE official list, first category, KCEL) of JSC "Kcell" were included in the representative list of shares for KASE Index calculation from February 1, 2013.

February: On February 6, 2013, Veysel Aral, CEO of Kcell and Regional Head of Central Asia, was appointed President of Business area Eurasia. In this role, he succeeds Tero Kivisaari, who has been managing dual roles since his appointment as President of Business area Mobility Services in October 2012.

March: On March 13, 2013 the Board of Directors of Kcell JSC introduced a function of internal audit in Kcell JSC to perform control over financial and business activity of the Company.

April 19, 2013

Veysel Aral

Chief Executive Officer

This report has not been subject to review by auditors.

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Statements of Financial Position

Condensed Consolidated Statements of Cash Flows

Condensed Consolidated Statements of Changes in Equity

Basis of preparation

General.These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") under the historical cost convention as modified by the initial recognition of financial instruments based on fair value.

New accounting standards. Certain new standards and interpretations have been issued that are mandatory for the annual periods beginning on or after January 1, 2013 or later, and which the Group has not early adopted. For additional information, see corresponding section in auditors' report.

Non-recurring items

Investments

Related party transactions

For the first quarter ended March 31, 2013, Kcell purchased services for KZT 117 million and sold services for a value of KZT 50 million. Related parties in these transactions were mainly TeliaSonera and its group entities, Turkcell and Fintur Holding B.V.

Net debt

Financial key ratios

Contractual obligations

On March 31, 2012, contractual obligations in respect of property, plant and equipment totaled KZT 4,490 million (December 31, 2012: KZT 4,285 million), mostly related to purchase of telecommunications equipment from Ericsson and ZTE Corporation.

Forward-looking statements

This report contains statements concerning, among other things, Kcell's financial condition and results of operations that are forward-looking in nature. Such statements are not historical facts but, rather, represent Kcell's future expectations. Kcell believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions; however, forward-looking statements involve inherent risks and uncertainties, and a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement. Such important factors include, but may not be limited to: Kcell's market position; growth in the telecommunications industry; and the effects of competition and other economic, business, competitive and/or regulatory factors affecting the business of Kcell and the telecommunications industry in general. Forward-looking statements speak only as of the date they were made, and, other than as required by applicable law, Kcell undertakes no obligation to update any of them in light of new information or future events.