May, 2014

2013 RESULTS

I. Main Operational Results 2

II. Key Financial Results 3

III. Structure of Revenue 4

IV. Debt Capital 5

V. Capital Expenditures 6

VI. Large Investment Projects 7

VII. Dividend Policy 8

VIII. Credit Ratings 9

IX. Development of LTE Services 10

X. Pay ТV 11

XI. Development of the Backbone Network 12

CONTENT

1

2

MAIN OPERATIONAL RESULTS

• Revenue: KZT190 867 m

• Net income: KZT19 614 m

• EBITDA: KZT65 829 m

• EBITDA/margin: 34.5%

Key Financial

Indicators

• Fixed lines: 4 085 811

• Broadband subscribers:1 467 520 (ports)

• IP TV subscribers: 246 435

Main

Operational

Results

• Acquisition of Digital TV LLP and MaxCom LLP

• Integration with Digital TV LLP

Assets

Acquisition

• Opening of the telecommunication networks „

joint of Kazakhtelecom JSC and

Turkmentelecom NTC

Backbone

Network

• Early redemption of 30 148 000 registered

coupon bonds

• Raising new loans: Cisco Systems Capital

Netherlands B.V., SB Sberbank JSC for project

financing

Credit Profile • LTE network launching in Aktau, Aktobe,

Atyrau, Karaganda, Ust-Kamenogorsk and

Shymkent

Strategic

LTE (4G)

Project

• The decision of the Extraordinary Shareholders

Meeting dd. 27.12.2013 regarding payment of

dividends in the amount of KZT2 603.90 per

share

Dividends • Continuing construction of FTTH network in 18

cities of Kazakhstan: 181 thousand ports

Strategic

FTTH

Project

3

KEY FINANCIAL RESULTS

Description

• In 2013, revenue growth was

8.7%. The revenue growth was

obtained due to the growth of

revenue from local telephony,

broadband and IP TV services.

• Decline in net income by 2.6%

and EBITDA by 4.7%. This

decline is due to implementation

of the project for construction of

LTE/GSM/UMTS mobile and data

networks.

• Decline in EBITDA margin by

12.2% (from 39.3 in 2012 to

34.5 in 2013).

• Partial early redemption of 30 148

000 bonds in the amount of

USD200 m allowed significant

increase of the safety margin of

the following important ratios:

- Debt / Equity:

0.33 (2012) and 0.24 (2013)

- Debt / EBITDA:

1.32 (2012) and 0.95 (2013)

Cash as of

31.12.2013

KZT51 720 m

Acquisition of Digital TV and MaxCom

KZT10 232 m

Payment of dividends for

2-4Q 2012

KZT1 779 m Partial early redemption of 30 148

000 bonds

(USD200 m)

Key Financial Results

Cash as of the end of the year

20 133 19 614

69 068 65 829

175 669 190 867

2012 2013

KZ

T m

Net Income EBITDA Revenue

4

STRUCTURE OF REVENUE

9.2%

6.5%

4.5%

5.5%

23.9%

34.7%

1.0%3.7%

11.0%

DLD / ILD

Calls to subscribers of other operators, including mobile operatorsAgreements with international operators

Lease of transport network channels

Local telephony

Data network

IP TV

Mobile communications

Other revenues

7.3%5.1%

3.6%

3.4%

25.1%

37.2%

2.5%2.3%

13.5%

DLD / ILD

Calls to subscribers of other operators, including mobile operators Agreements with international operators

Lease of transport network channels

Local telephony

Data network

IP TV

Mobile communications

Other revenues

Structure of Revenue in 2012

Structure of Revenue in 2013

Description

• The largest share of revenue

comes from the broadband and

local telephony services, 37.2%

and 25.1% accordingly (2013).

• Gradual decline in revenue from

DLD/ILD calls, calls to subscribers

of other operators, including

mobile operators, is observed

during the last several years. This

decline is due to the development

of alternative ways of calls,

migration of DLD/ILD calls traffic

to mobile operators‟ networks.

• Fast growth of revenue from IP

TV services is observed in the

Company‟s structure of revenue.

Revenue from these services

grew in more than 2.5 times in

2013 compared to 2012.

5

DEBT CAPITAL

37 863

11 107

91 329

62 826

2012 2013

Net Debt Total Debt

15 660

29 483

17 683

Bonds

Loans

Lease

• In 2013, own and debt capital were

used to finance investment projects.

Thus, the Company ensured balanced

structure of project financing (27% of

investments were leveraged).

Financing Structure

1

• Cisco Systems Capital Netherlands

B.V.: with the total amount of USD8.5m

(to finance supply of Cisco‟ equipment)

with the fixed rate of 5.25 %

• SB Sberbank JSC – Agreement for

non-revolving credit facility of

USD185m with the fixed rate of 4.95%

for 7 years.

• SB Sberbank JSC – Agreement for

non-revolving credit facility of KZT3bn

with the fixed rate of 4.5% for 4 years.

New Loans in 2013

2

• As a result of early redemption of

bonds, the saving will be about

KZT2.9bn annually starting from 2014.

Total cumulative saving of financial

expenses, including the redemption

fee, will be about KZT15.3bn till the end

of bonds‟ maturity (30.10.2019)

Saving of financial expenses

3

Dynamics of Debt, in KZT m Structure of the Debt Capital as of 31.12.2013, in KZT m

6

CAPITAL EXPENDITURES

37 486

4 924

1 442

8 772

10 646

63 270

42 045

4 192

1 271

11 212

2 783

61 503

0 10 000 20 000 30 000 40 000 50 000 60 000 70 000

Telecommunications networks

Information technologies

Group of general and administrative

expenditures

Subsidiaries

Others

Total

2012 2013

Description

• The top-priority goal of

Kazakhtelecom‟s investment

policy is further development

of the Company‟s principal

asset, i.e. the high-speed

telecommunications network,

using latest technologies and

equipment.

• As a part of implementation of

such large-scale projects as

construction of FTTH networks

and implementation of

LTE/GSM networks,

Company‟s CAPEX budget will

be more significant in 2013 -

2014. In subsequent years the

Company is planning to

reduce investments that will be

mainly aimed at implementing

new commercial investment

projects.

Budget of capital expenditures, in KZT m

LARGE INVESTMENT PROJECTS

• Budget: KZT11 106m

• Meeting the demand for telecom services in rural areas due to the prompt launch of the wireless telecom network with

voice and data communication by using EVDO technology. Period of implementation: 2012-2015

Upgrade and

development

of

CDMA/EVDO

rural

networks

• Budget: KZT86 664m

• Provision of the high-speed wireless broadband services by constructing 4G network of LTE standard on the basis of

АLTEL JSC. Period of implementation: 2012-2021

Implementati

on of

LTE/GSM/UT

MS networks

in 2012 –

2021

• Budget: KZT65 101m

• Fundamental change in the technology of the “last mile” construction for provision of the high-speed Internet access

services in Astana and Almaty and regional centers. Period of implementation: 2011-2014

Construction

of FTTH

network

• Budget: KZT10 873m

• Meeting the existing and potential demand for telecom services due to implementation of Pay TV services and providing

bundled telecom services.

Implementati

on of IP TV

7

Дивидендная политикаDIVIDEND POLICY

• Dividends equal maximum of :

- 15% * Net income = KZT Х

- % of dividends determined according to the level of

Company‟s financial performance * Net income – Own

investments in the projects approved by the Investment and

Innovation Committee of the Fund – R&D Investments =

KZT ХХ

Calculation of Minimal Dividends

• The bigger amount of dividends, the bigger financial stability‟s

safety margin and vice versa.

• The amount of dividends is reduced by the amount of

Company‟s own investments in the projects approved by the

Investment and Innovation Committee of the Fund.

• The amount of dividends is reduced by the amount of

investments in research and development (R&D).

• The minimum amount of dividends is 15% of the Company „s

net income.

Amount of Dividends

8

1H 2013 and a part of

retained earning of

past years

422.09 528.731328.8

18720.03

2603.09

2009 2010 2011 2012 2013

• The objective of the Dividend Policy of Kazakhtelecom JSC is to secure balance of interests between the Company and shareholders,

predictability and transparency in determining the amount of dividends, the terms and procedure of payment thereof.

• The amount of dividends to be paid out depends on the financial and economic performance of Kazakhtelecom JSC that is determined

on the basis of financial sustainability and liquidity indicators. The procedure and order of payment of dividends and the order of

settlements with shareholders on outstanding dividends is regulated by the Dividend Policy.

• A decision on the amount of dividends is taken by the General Shareholders Meeting of Kazakhtelecom JSC.

Payment of dividends for the last 5 years (in KZT per share)

Including:

1Q 2012 - KZT18 559.27

2-4Q 2012 - KZT161.03

9

CREDIT RATINGS

In 2013, in cooperation with the

rating adviser (Gazprombank) the

Company worked under

implementation of the approved

Action Plan to maintain Company‟s

credit rating.

Annual meetings of the

Management Board of

Kazakhtelecom JSC and

management of ALTEL JSC with

analysts of international rating

agencies Standard&Poor‟s and

Fitch Ratings were organized.

As a result of success of the

adopted rating maintenance

strategy, the Company achieved

stabilization of its credit ratings.

• Credit rating outlook was improved («ВВ») from «Negative» to «Stable»

(10.01.2014)

• Company‟s credit rating was confirmed being of the same level («ВВ»,

Stable)

DEVELOPMENT OF LTE SERVICES

10

Mobile network of the forth generation (4G LTE), which allows creation of more convenient, user-friendly, simple and cost-

saving conditions for subscribers for using high-speed mobile Internet access for business, entertainment, chatting,

learning and whole range of opportunities offered by the global network, was launched in December 2012 under the brand

«ALTEL 4G» in Astana and Almaty on the basis of ALTEL JSC.

During 2013 4G mobile Internet service became available in the following

cities:

Aktau

Aktobe

Atyrau

Karaganda

Ust-Kamenogorsk

Shymkent

As well as in the following satellite cities of Almaty:

Kapchagai

Kaskelen

Esik

Talgar

1 770

94 843

2012 2013

Active subscriber base as of the end of the period

In 2014 it is planned to continue the launch of LTE network in the cities with population of 50 thousand people and more.

PAY TV

Number of access points

20132012

1 770

4 802

2012 2013

Revenue, KZT m

171.2%

65.8%

During the year the Company demonstrated the highest growth rate in Pay TV segment keeping far ahead of

the growth rates of this market in general.

Within 2 years Kazakhtelecom JSC has become the third player in this market segment with the market

share of 11.2%.

Projected stable growth of ID TV segment in the Company‟s revenue structure during 2013-2018.

This service provides subscribers with the interactive service, which allows subscribers to chose content by

themselves and manage TV service as they wish.

1

2

3

4

11

12

DEVELOPMENT OF THE BACKBONE NETWORK

Description

• In 2013, telecommunication

networks„ joint of

Kazakhtelecom JSC and

Turkmentelecom NTC was

organized

• DREAM project was launched

jointly with MegaFon. The first

high-speed channel with the

capacity 10 Gbps in the

direction from Europe to China

was sold.

• Joints with Rostelecom OJSC

and TransTeleCom JSC were

expanded.

• Transit flows increased

significantly from 21.8 Gb in

2012 to 35.5 Gb in 2013 (in 1.6

times)

• Also, from 2012 till 2013

connections to external

Internet resources were

expanded in 1.6 times from

230 Gb to 360 Gb accordingly

TurkmenistanUzbekistan

Kyrgyzstan

China

RussiaRussia

China – 3 Russia – 6 Kyrgyzstan – 5

Uzbekistan – 2 Turkmenistan – 1

Total number of joints – 17, including:

THANK YOU FOR ATTENTION!

Manager of the Project Finance Department

Mr. Asset Shakhanov

Tel: +7 (727) 258-11-75

E-mail: asset.shakhanov@telecom.kz

Contacts: