Review of regulatory environment

Description of the main activities of Kazakhtelecom JSC:

In accordance with clause 1 of Article 7 of the Kazakhtelecom’s Charter the Company operates as a telecommunications operator of the Republic of Kazakhstan for the creation, installation, operation and maintenance of a public telecommunications network and private telecommunications systems, performs the functions of a public telecommunications network operator and, among others, an operator of  longdistance and international communications with the right to make settlements with the Communications Administrations of other states, companies, users, international organisations in accordance with the Regulations of the International Telecommunication Union and the  legislation of the Republic of Kazakhstan.

State regulatory provisions of the  legislation of the Republic of Kazakhstan governing the activity of Kazakhtelecom JSC

The main  legislative acts of the Republic of Kazakhstan governing the activity of Kazakhtelecom JSC are the Business Code of the Republic of Kazakhstan, the Laws of the Republic of Kazakhstan On Communications, On Natural Monopolies, and On Joint Stock Companies.

Business Code of the Republic of Kazakhstan

The Business Code of the Republic of Kazakhstan determines the  legal, economic and social conditions and ensures freedom of entrepreneurship in the Republic of Kazakhstan and regulates public relations arising in connection with the interaction of business entities and the state, including state regulation and support for entrepreneurship.

The Business Code of the Republic of Kazakhstan was amended during 2023 in various ways:

In accordance with the Law of the Republic of Kazakhstan dated 30.12.2022 No.177-VII On introducing amendments and additions to some  legislative acts of the Republic of Kazakhstan on the implementation of certain instructions of the Head of State, the following amendments and additions were entered to the Business Code:

1) Article 90-6 Competence of the antimonopoly authority is supplemented with subparagraph 39-5) in the following wording:

“39-5) The antimonopoly authority approves in the manner established by the  legislation of the Republic of Kazakhstan, the business plan for a republican public-private partnership project, the investment proposal of a republican state investment project, the tender (auction) documentation of a republican public-private partnership project, including in the case of making amendments and (or) additions to them in the part related to the protection of competition and restriction of monopolistic activities, for projects involving the provision of public functions by private partners;”;

2) Article 138 Spheres of activity of business entities in which control is exercised is supplemented with subparagraphs 118) and 119) in the following wording:

“Control shall be exercised:

118) for compliance with the legislation of the Republic of Kazakhstan on online platforms and online advertising;

19) for compliance with the legislation of the Republic of Kazakhstan on personal data and their protection.”.

3) Article 163-1 Mandatory services provided by natural monopolies and quasi-public sector entities was supplemented with paragraph 3 in the following wording:

“3. When providing mandatory services to individuals and  legal entities, natural monopolies and quasi-public sector entities use informatisation objects and submit data in machine-readable form to “e-government” informatisation objects in accordance with the Rules for the Provision of Mandatory Services by Natural Monopolies and Quasi-public Sector Entities in the Framework of Competition Protection and Restriction of Monopolistic Activities.”.

4) paragraph 3 of article 193 is amended and stated in the following wording:

“3. The subject of state monopoly, except for the Government for Citizens State Corporation, Social Medical Insurance Fund, State Technical Service, may be only a state enterprise established by decision of the Government of the Republic of Kazakhstan.

The subject of a special right may be a state enterprise, joint-stock company,  limited  liability partnership, one hundred per cent of shares (participatory interests in the statutory capital) of which directly or indirectly belong to the state, determined in accordance with the procedure established by the Government of the Republic of Kazakhstan.

The requirement specified in part two of this paragraph shall not apply to the Single Operator of Labelling and Traceability of Goods and  legal entities, more than fifty per cent of voting shares of which are directly or indirectly owned by the state, placed shares on the primary securities market, as well as persons affiliated with them.”;

5) Article 193, paragraph 4, is amended and stated in the following wording:

“4. It shall be prohibited to grant market participants other exclusive or preferential rights to produce, sell and (or) purchase any goods on a competitive market in violation of the requirements of this Article.”.

In addition, according to the Law of RK dated 05.04.2023 No.221-VII On introducing amendments and additions to some  legislative acts of the Republic of Kazakhstan on digitalisation of state services in the sphere of  land relations, Article 163-1 of the Business Code of the Republic of Kazakhstan is supplemented with paragraph 3 of the following content:

“3. When providing mandatory services to individuals and  legal entities, natural monopolies and quasi-public sector entities use informatisation objects and submit data in machine-readable form to «e-government» informatisation objects in accordance with the Rules for the Provision of Mandatory Services by Natural Monopolies and Quasi-public Sector Entities in the Framework of Competition Protection and Restriction of Monopolistic Activities.”.

At the same time, in accordance with the Law of RK dated 19.04.2023 No.223-VII On introducing amendments and additions to some  legislative acts of the Republic of Kazakhstan on the issues of administrative reform in the Republic of Kazakhstan, the following amendments and additions were made to the Business Code of the Republic of Kazakhstan:

1) Article 61, paragraph 1 is stated in the following wording:

“1. The  limits of compulsory membership fees are determined by the authorised body for entrepreneurship.”;

2) The competence of the Government of the Republic of Kazakhstan in the field of state regulation of entrepreneurship was changed, Article 84 of the Business Code of the Republic of Kazakhstan is set out in the following wording:

“The competence of the Government of the Republic of Kazakhstan includes:

1) approval of the rules for maintaining and using the register of business entities;

1-1) development of the main directions of state policy in the field of state regulation of entrepreneurship;

1-3) determination of spheres of entrepreneurial activity regulation, regulatory acts of which are subject to inclusion in the register of requirements;”;

3) paragraph 2 of article 85 of the Business Code of the Republic of Kazakhstan Authorised body on entrepreneurship and its competence in the field of state regulation of entrepreneurship was supplemented with subparagraph 1-1) in the following wording:

“1-1) formulates and implements state policy in the sphere of state regulation of entrepreneurship;”,

4) subparagraphs 5-1) and 6) of paragraph 2 of Article 85 of the Business Code of the Republic of Kazakhstan are set out in the following wording:

“5-1) approves the rules for maintaining the register of mandatory requirements in the field of entrepreneurship;

6) approves the rules for calculating the average annual number of employees and average annual income;”.

Law of the Republic of Kazakhstan On Communications

Law of the Republic of Kazakhstan On Communications (hereinafter – the Law on Communications) establishes the  legal basis for activities in the field of communications in the territory of the Republic of Kazakhstan, determines the powers of state bodies to regulate these activities, the rights and obligations of individuals and  legal entities providing or using communications services.

In accordance with the Law of the Republic of Kazakhstan dated 19.04.2023 No.223-VІI On introducing amendments and additions to some legislative acts of the Republic of Kazakhstan on issues of administrative reform in the Republic of Kazakhstan:

1) the competence of the Government of the Republic of Kazakhstan in the field of communications was changed, Article 7 of the Law on Communications was amended and reworded as follows:

“Article 7: Competence of the Government of the Republic of Kazakhstan

The competence of the Government of the Republic of Kazakhstan in communications shall include:

1) development of the main directions of the state policy in the field of communications and organisation of their implementation;

2) development and implementation of the state policy in the field of radio frequency spectrum allocation, as well as effective use of radio frequencies and orbital positions of communication satellites;

3) approval of the procedure for the preparation and use of public telecommunications networks, resources of the unified telecommunications network for the needs of government agencies, defence, security and  law enforcement agencies of the Republic of Kazakhstan.”;

2) The competence of the authorised body in the field of communications was amended. Thus, subparagraph 1) of paragraph 1) of Article 8 of the Law on Communications is reworded as follows:

“1) formation and implementation of the state policy in the field of communications including distribution and use of national resources in the field of communications, as well as participation within its competence in the field of technical regulation, ensuring uniformity of measurements and standardisation in the field of communications and ensuring its implementation;”;

At the same time, paragraph 1 of Article 8 of the Law on Communications is supplemented with subparagraph 1-1) in the following wording:

“1-1) approval of the rules for holding a tender to determine universal service operators, including the calculation of the amount of subsidies and the procedure for assigning the obligation to provide universal services to telecommunications operators by the authorised body, the requirements for telecommunications operators to provide universal telecommunications services and the  list of universal telecommunications services;”;

3) Article 9 of the Law on Communications was amended. Now the Ministry of Defence of the Republic of Kazakhstan instead of the Central Executive Body of Military Administration became the radio frequency body that distributes, allocates and assigns frequency bands, radio frequencies (radio frequency channels) in the Republic of Kazakhstan;

4) Amendments were made to paragraph 7, Article 36 of the Law on Communications, instead of the Government of the Republic of Kazakhstan, now the amount and procedure of compensation for the increase in tariffs of subscription fees for the provision of telecommunications services to socially protected citizens is determined by the authorised body.

Law of the Republic of Kazakhstan On Natural Monopolies

The Law of the Republic of Kazakhstan On Natural Monopolies applies to relations in the market of services in Kazakhstan provided by subjects of natural monopolies.

In accordance with the Law of the Republic of Kazakhstan dated 30.12.2022 No.177-VII On introducing amendments and additions to some  legislative acts of the Republic of Kazakhstan on the implementation of certain instructions of the Head of State, the following significant amendments and additions were made to the Law of the Republic of Kazakhstan On Natural Monopolies:

1) Paragraph 1 of Article 22 is supplemented with subparagraph 9-2) and reworded as follows:

“9-2) change in the average monthly nominal wage of one employee by types of economic activities in the region (city), developed according to statistical data for the year;” (Grounds matter for changing the tariff approved by the authorised body before its expiry;

2) Paragraph 12 of Article 25 shall be supplemented with parts two, three, four and five of the following content:

“Public hearings, reports of subjects of natural monopolies to consumers and other stakeholders shall be held including online broadcasting and unhindered access of participants of public hearings.

When a state of emergency, restrictive measures, including quarantine, are imposed in the country, the authorised body or its territorial subdivisions, natural monopoly entities shall hold public hearings, reports to consumers and other stakeholders via online broadcasts.

When holding public hearings via online broadcasting, the department of the authorised body or its territorial subdivision shall, not  later than ten calendar days before the date of the public hearings, place an announcement in the mass media and on the Internet resource about the upcoming public hearings, indicating the date, time and a  link to the online broadcast of the public hearings.

If financial statements of a natural monopoly entity in accordance with the  laws of the Republic of Kazakhstan are subject to mandatory audit, their publication in mass media provided for by paragraph 2 of this Article shall be carried out within ten calendar days after completion of the audit.”;

3) Article 26, paragraph 2, regarding the obligations of a natural monopoly entity was supplemented with subparagraphs 24-2) and 24-3), and now a natural monopoly entity is obliged to:

“24-2) to agree with the authorised body on a contract of trust management of property owned by a natural monopoly entity being used in the technological cycle of providing regulated services;

24-3) to coordinate with the authorised body credit agreements for attracting loans from international financial organisations, specialised sectoral banks, the Kazakhstan’s Development Bank and second-tier banks of the Republic of Kazakhstan;”.

According to the Law of the Republic of Kazakhstan dated 19.04.2023 No. 223-VII On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Administrative Reform in the Republic of Kazakhstan, the Law of the Republic of Kazakhstan On Natural Monopolies has been amended as follows:

1) the competence of the Government of the Republic of Kazakhstan in the sphere of natural monopolies has been changed, Article 7 is reworded as follows:

“Article 7. Competence of the Government of the Republic of Kazakhstan The Government of the Republic of Kazakhstan develops the main directions of state policy in the spheres of natural monopolies and organises their implementation.”;

2) the competence of the authorised body has also been amended, subparagraph 2) of Article 8 is reworded as follows:

“2) formulates and implements the state policy in the spheres of natural monopolies and organises its implementation;”.

In addition, according to the Law of the Republic of Kazakhstan dated 5 April 2023 No. 221-VII RC On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Digitalisation of State Services in the Sphere of Land Relations, the following significant amendments and additions were made to the Law of the RK On Natural Monopolies:

1) Article 24, paragraph 7 is reworded as follows:

“7. Issuance of technical conditions for connection to the networks of a natural monopoly entity at the request of the architecture and town planning bodies shall be carried out by the natural monopoly entity:

1) for technically uncomplicated objects – within two working days;

2) for technically complex objects – within five working days.

Technical conditions for connection to the networks of a natural monopoly entity or an increase in the volume of a regulated service shall be issued for the normative period of design, construction and shall be submitted by the architecture and town-planning bodies to the state town-planning cadastre.”;

2) Article 25 is supplemented by paragraph 6-2 as follows:

“6-2. Natural monopolies entities shall place and (or) update in the automated information system of the state town-planning cadastre in machine-readable form according to the forms approved by the authorised body for architecture, town-planning and construction: