Part 1. Does Kazakhstan need a fourth operator? 📶

Part 1. Does Kazakhstan need a fourth operator? 📶 Let’s figure out which competition model will actually give the subscriber more than just another tower. Every few years, the same conversation pops up in the communications market: the market lacks competition, another player is needed. The logic seems clear - more networks, more competition for subscribers, lower prices. But if you break this logic down into its components, it turns out that the question “how many operators does Kazakhstan need” is not exactly the question worth asking. We figured out what actually determines the quality of competition in the mobile market - and why the answer may not be where it is usually looked for. More operators – is this really about competition? The first reaction to talk about increased competition is usually the same: we need another operator with its own network. The more independent networks there are, the more intense the struggle, isn’t it? Not really. This only works if the emergence of a new network does not prevent everyone else from investing in quality, coverage and new technologies. But with this in Kazakhstan, everything is not so simple - we’ll explain why later. How much does it cost to build a network from scratch? Full-fledged

An operator is not a brand and a tariff line, but base stations, a transport network, a core, licenses for frequencies and an endless cycle of equipment modernization for each new generation of communications. Moreover, you need to invest not just once, but constantly - traffic is growing, standards are changing. For Kazakhstan, this is more expensive than for most markets: the country is huge, and population density is low. This means that each new network costs more per subscriber - especially where the return on investment is already poor. OECD in its analysis of Kazakhstan telecom comes to a similar conclusion: barriers to entry into the market here are directly tied to geography, and our competition can be measured by patterns of compact Europe is not the most accurate idea. Are the frequencies generally rubber? No. And this is an important point that is often left out of the conversation: the new infrastructure player is not creating additional spectrum out of thin air. Frequencies are a limited resource that the state allocates

t between operators. Imagine a system of pipes: there are more taps, but there is exactly the same amount of water in the system. Each tap receives less pressure. Exactly the same thing happens with frequencies when they are divided between a large number of networks - exactly what the subscriber directly experiences suffers: the speed and capacity of the network. Who will pay for a new player A new operator rarely creates demand out of nowhere - more often it simply redistributes an already existing market among a large number of participants. Everyone's income is falling, but the costs of maintaining the network are not going away. The result: less free money for coverage, capacity and quality - especially where the return is so-so. The scale of the problem is clearly visible in the European market: according to GSMA Intelligence, operators lack about 205 billion euros to upgrade networks to the level world leaders - and this is without the emergence of new players. That is, the question is not “does the industry have extra money for another network”, but “how to cut the already tight budget for quality.” What does the state have to do with it? The mobile economy

Communications are not only operators and subscribers. These are also taxes, payments for frequencies and dividends from companies in which the state has a stake. If the new model of competition reduces the profitability of the market as a whole, it is felt here too. Therefore, any scenario of increased competition should be assessed not only from the perspective of “the subscriber wins,” but also from the perspective of the sustainability of the entire industry, including the interests of the state as a co-owner and regulator.