Freedom Telecom, a new telecommunications operator in Kazakhstan, plans to build tens of thousands of kilometers of broadband network across the country and to take part in public biddings for internet services for villages and various social facilities, according to Timur Turlov, CEO of Freedom Holding Corp., the parent company for the new telecom operator.
In this article, we will explore why a multi-national and diversified financial services holding company such as Freedom is embracing this vertical and how, as a new operator and one of the most interesting figures in Kazakhstan's business landscape, it expects to positively impact the economic and social fabric of this country.
Turlov and his Freedom
Key facts about Timur Turov and his business:
- He made his first steps in the world of investments when he was just 15. In 2003, at age 16, he joined World Capital Investments as a trader. Two years later, he started working at Uniastrum Bank, where he was part of a team responsible for paving the way for investors who wanted to trade on the American stock market. His academic background is in economics.
- In 2008, amidst the global financial crisis, Turlov established Freedom Finance, a brokerage company focused on providing access to the most popular U.S. stock exchanges. The company's business rapidly grew in Kazakhstan, the EU, and other countries around the world.
- In the fall of 2019, Turlov's Freedom Holding Corp. was listed on the Nasdaq under the ticker symbol FRHC. In 2020, Freedom acquired Prime Execution, an American broker under which Freedom Capital Markets was established. Freedom Capital Markets, as the U.S. investment banking arm of Freedom Holding Corp., organizes IPOs and secondary offerings on American stock exchanges and provides a full range of equity capital markets services to its clients. As of today, Freedom Holding Corp. has a market capitalization of $4.5 billion and controls $7 billion worth of assets. S&P has affirmed the company's rating at "B-."
- In 2022, Turlov obtained Kazakhstani citizenship and was ranked one of the five wealthiest businessmen in Kazakhstan. In the same year, Turlov became a member of the executive committee of the Kazakhstan Football Federation and was the president of the Kazakhstan Chess Federation in January 2023. He puts a lot of his personal time, energy, and resources into many social and cultural projects in the country and beyond.
Freedom's Ecosystem in Kazakhstan
As Turlov has lived in Kazakhstan for more than ten years, he often talks about recent positive changes in the country. For instance, thanks to the intensive digital transformation process in Kazakhstan, Freedom Holding Corp. has the opportunity to create and develop unique fintech products. According to Turlov, Kazakhstan still has great growth potential in terms of developing the company's unique ecosystem, unlike in many developed economies where almost all niches of the financial market are occupied and where the creation of a similar ecosystem would require billions of dollars in investments.
"Initially, Freedom was just a broker that helped investors find promising securities on international markets. Now, we are operating in 19 countries. In December 2023, we expanded our business in the EU and as a result, we run 10 representative offices throughout that region. We are currently focusing on investments aimed at leveraging data and better integrating our financial services ecosystem. While we operate throughout parts of Central Asia, our efforts are primarily occurring in Kazakhstan, where the bulk of our revenue is generated and where we initially launch new and innovative products and services. It's here where we aggregate the most data across all of our platforms, which aids us in making our products better, unique, and more valuable to our clients. This is our main strategy," Turlov commented. Freedom Holding Corp. has always been headquartered in Kazakhstan.
Freedom's business in Kazakhstan consists of the following:
1) Freedom Bank. It is one of the eight leading commercial banks in Kazakhstan. It offers customers a wide range of digital products, including mortgages, car loans, and online business loans. The Bank is the ultimate leader in terms of digital mortgages in the country. Over the past two years, Freedom Bank effectively ramped up its assets from $196 million to $4.4 billion. In Q3 of the 2024 fiscal year (starting October 1 and ending December 31, 2023), the Bank reported $140.2 million in revenue.
2) Freedom Broker is represented by two brokerages under a single brand. One of them operates on the Kazakhstani market (Freedom Finance), while the other (Freedom Finance Global) provides access to global stock markets within the Astana International Financial Center. In Q3 of 2024, they reported $13 million and $96 million in revenue, respectively. Currently, Freedom Broker renders services, including trading with futures and options, to more than 220,000 clients.
3) Tradernet. This is a special app designed for trading through the aforementioned brokerages. The platform supports trading transactions, including the buying and selling of stocks, as well as other financial tools in 16 languages. Many market participants use this platform, while Freedom Broker and Freedom Bank do so all the time. The system processes more than 43 million trade orders per month, and about 40,000 customers use it every day (400,000 per month). The program has been constantly evolving. It relies on AI to collect information about issuers, analyze competitors in different economic sectors, and execute many other tasks.
4) Freedom Pay. This e-payment system successfully operates in Kazakhstan, Kyrgyzstan, and Uzbekistan, where it provides services to about one thousand small and medium-sized businesses. Under Freedom Holding Corp.'s strategy, the company expects to introduce full-scale processing and additional transactional services as part of its service offering.
5) Freedom Insurance and Freedom Life are two insurance companies within the company that offer a variety of online insurance products for Freedom Bank customers.
6) Lifestyle services are also part of Freedom's ecosystem. These are Freedom Mobile, a smartphone retail network; Tiketon, an online ticket service; Arbuz.kz, an online supermarket; and Aviata and ChocoTravel, flight booking services.
Telecom and new opportunities for Freedom Holding Corp.
Freedom Telecom, the newest element of Freedom's ecosystem, stands apart in this hierarchy of businesses as Turlov has fully committed to developing the telecommunication market in Kazakhstan through this new telecom operator. The company has already raised $200 million through a 12% yield bond offering to finance the development of the new business.
According to Turlov, on a strategic level, he's looking to pursue the synergy between the Bank and the telecom operator. Freedom Bank currently has more than one million customers and still has significant growth potential in Kazakhstan. As part of its diversified offering of services, Freedom is expecting to attract additional clients through its telecommunication service offering, which the company believes could also be ideal customers for its Bank. This will be a unique cross-selling proposition for the company and Turlov is excited about its growth potential.
The new telecom operator is aiming at a very ambitious goal as it aspires to cover the entire territory of Kazakhstan with resilient high-speed internet and 5G mobile networks and make these services affordable for all Kazakhstanis. Turlov believes that deploying this new network will open plenty of new business opportunities as any project based on fiber optic technology would be crucial for the country's economy and would have a short payback period. "We are looking to build the biggest telecommunication infrastructure in terms of reach and capacity in the country," he said.
The new company intends to build new broadband internet networks and participate in bids for mobile frequencies. According to Turlov, the company doesn't plan to purchase any infrastructure from other operators or invest in technologies of previous generations like 4G. "Of course, in the past we could have done something like invest a billion dollars, for example. But what I really want is to expand the market for the future of Kazakhstan, to make a social difference. That is why we are investing in 5G. We know that we won't turn into the number one operator anytime soon. But we also know that there are enough 4G networks in Kazakhstan. We are going to think how to combine all these technologies to provide our customers with the best coverage all over the country," Turlov underlined.
The CEO fully understands that the construction of the telecommunication infrastructure is a resource and time-consuming task. Except for Kazakhtelecom, not a single company has done so in Kazakhstan so far. As a result, Kazakhstan is ranked 100th in terms of fixed internet speed. Turlov is confident that his personal experience in developing big businesses, the expertise of his team, and the skills of Freedom Telecom executives will allow them to find a more efficient and less costly way to build a new advanced telecommunication network.
"We want to build tens of thousands of kilometers of networks this year and we expect to take part in the public bidding process for the construction of fixed internet networks. We are also awaiting the opportunity to bid for mobile frequencies as well," Turlov said.
In addition, the telecom operator opened a new subsidiary that will be responsible for the development of streaming services in Kazakhstan and may turn into a kind of local Netflix in the future. This means that the new company will not just acquire licenses for content produced in the West but will also produce and distribute exclusive local movies and TV series in Kazakh and Russian languages.
