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Business news, 07.11.2005 14:37

Petersburg Provider Moves Into Kazakhstan Market

kazakhastan_telecommunications St. Petersburg-based provider i-Free has started distributing mobile content services in Kazakhstan, the company said Wednesday. The agreement was signed with KaR-Tel, a mobile operator with more than 1.6 million subscribers.

“By the end of next year we expect to attract 20 percent of KaR-Tel subscribers. To reward customer loyalty we opened a call-center in Kazakhstan providing information and advice about products and services,” said Yekaterina Ivanova, manager for international development at i-Free.

i-Free will first distribute mobile games, pictures, ring-tones and the Jamango dating and communication service.

“Kazakhstan has the most attractive potential. In terms of population it is the fourth largest country in the CIS. It has a high GDP. The supply of additional services to mobile phones is only starting to develop there and we have the chances to get ahead,” Ivanova said.

She indicated that the company, which last year held 14 percent of the Russian market but also operates in the Ukraine and Moldova, is eyeing up countries in Asia and the Americas as areas for further expansion. Since starting out in 2001 the company has gained a client base of over18 million.

The deal got a positive reaction from telecom experts, however they said that i-Free should be aware of specific market features.

“Unlike Ukraine or Belarus, the Kazakh market is hard to enter due to the specific ways in which it conducts its business. But the market is very promising. It is the largest market in the CIS after Russia, the Ukraine and Belarus,” said Oksana Pankratova, leading telecom analyst at iKS Consulting.

Pankratova forecasts i-Free providing services to four to five percent of its mobile operators’ subscribers.

“In Russia nine to 10 percent of mobile subscribers use content services. Though the content market has long existed, active market development has been seen for only two years,” she said.

Victor Naumov, Head of IT and intellectual property protection group at DLA Piper, indicated several legal issues that could be difficult for a telecom company to tackle in Kazakhstan.

“The first issue is intellectual property protection for mobile content. It is most likely that Kazakhstan lacks the necessary legislation and i-Free will have to arrange deals with every single intellectual property owner or use a special organization to manage them.”

“It is still unknown whether Kazakhstan has a system in place to protect consumers, for example, through properly disclosed information about products, or the company’s accounts,” Naumov said.

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