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Kazakh Stocks Lose Most in Nine Months on Kazakhtelecom Drop

Kazakhstan’s main share index headed for its biggest decline in nine months as trading was halted in Kazakhtelecom, which plunged 31 percent before it announced it will pay almost a third of its net income as dividends.

The Kazakhstan Stock Exchange Index KASE fell 5.5 percent to 1,144.72 by 2:56 p.m. in Almaty, the most since August on a closing basis. Kazakhtelecom slumped to 20,000 tenge, leading to a halt in trading, according to a statement on the exchange’s website.

“The drop in Kazakhtelecom is due to the potential closure of the register for acceptance of dividends on May 8,” Evgeniy Popov, head of asset management at Troika Dialog Kazakhstan, said by e-mail.

The company will pay 1,328.80 tenge per ordinary share as a dividend for 2011, according to a statement posted on the company’s website following a shareholder meeting today. This amount translates into 30 percent of net income in 2011, compared with 17.5 percent of profit in the previous year. The total dividend earmarked for ordinary shareholders is 14.5 billion tenge and that for preferred is 535.8 million tenge, according to the company.

The dividend payment date is to be decided over the next 20 days, the company said in the statement, adding the list of eligible shareholders was determined today.

Index Weight

The telecom company accounts for a 10 percent weighting in the country’s benchmark index. Stock exchange rules prohibit trading in shares that have fallen 30 percent or more in a session, according to the statement.

“On our estimate of 20% corporate tax, the company earned almost $864 million from the sale of the Kcell stake, which had a book value of $440 million,” Alexander Kazbegi, an analyst at Renaissance Capital, said in an e-mailed report on April 27 after the company recommended a dividend. “This supported the higher total dividend amount.”

Kazbegi said he previously thought the proceeds from KCB stake sale would be used to finance KazakhTelecom’s capex plans, “although the higher payout instead seems very positive to us”.

Kazakhtelecom sold a 49 percent stake in Kcell in December 2011 for $1.52 billion to Sonera Holdings B.V., a subsidiary of TeliaSonera AB.

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