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Azerbaijan - Telecoms, Mobile, Broadband and Forecasts

  • August 2014
  • -
  • Paul Budde Communication Pty Ltd
  • -
  • 44 pages

As Azerbaijan looks to set up an independent regulator, mobile broadband rapidly expands
Coming into 2014 Azerbaijan's mobile subscriber numbers had passed the 10 million milestone (107% penetration). After more than a decade of very strong growth, the rate of expansion had moderated somewhat. Operator Azercell continues to lead the market, but its earlier dominance was being slowly eroded and market share had fallen to around 42%, down from the more than 50% it held in years past. The second and third ranked operators, Bakcell (30%) and relative newcomer Azerfon (23%) were both throwing out a challenge to Azercell's number one ranking.

Although the fixed network provides good national coverage, there was little sign of a growth surge in this market; but the country could still claim a positive fixed-line penetration of 19% by the start of 2014 and growth was continuing along a reasonable path. Around 80% of the fixed lines are in urban areas, despite 50% of the population living in rural areas. Government-owned Aztelekom has long been the country's main provider of basic telephone services, being directly controlled by the ministry.
In the meantime, the number of internet users in the country, having increased by 100% between 2008 and 2010, had passed 5 million in 2012. Fixed broadband subscriptions had increased from 100,000 in 2009 to 1.3 million in 2012 and strong growth was continuing. In the meantime, mobile broadband had rocketed from just 19,000 in 2009 to 4.1 million by end-2013.

Azerbaijan put its first telecommunications satellite into orbit in 2013. The Azerspace-1 satellite was set to provide communications coverage for Azerbaijan, Central Asia, Europe and Africa over a designed mission life of 15 years. It was set to provide digital broadcasting, internet access and data transmission, among other services. The government subsequently announced that Azerspace-2, the country's second telecommunications satellite, would be launched in 2018.
On the back of a strong economy, Azerbaijan has made good progress in the building of its telecommunications and information technology sectors. It has had to overcome a number of major problems in the process, including:
poor telecom infrastructure inherited from the past;
low public awareness and understanding of computer technology;
the high cost of computer equipment in comparison to the average salary;
very high tariffs for satellite connections due to a monopoly held by the Ministry of Communications and Information Technologies (MCIT).

A substantial platform for the ongoing development of Azerbaijan's telecom sector was put in place more than a decade ago. By 2001 there were four joint-ventures offering telephone services, two mobile operators, and a number of Internet Service Providers (ISPs) in the country. All these ventures, established under the MCIT, were providing a range of basic telephone services, including mobile services. Prices varied considerably depending on the different cost of services offered to these companies by the ministry.

The expansion of the country's telecom sector has taken place in the context of a very strong developing economy. Azerbaijan has seen rapid economic expansion in recent times, recording annual GDP growth levels of up to 30% a few years back. However, the economy suffered a major setback following the Global Financial Crisis (GFC). The poor state of the global economy saw a big drop in Azerbaijan's oil and gas exports; real GDP grew by just 0.1% in 2011. In 2012/2013, however, there were all the signs of a recovery, as the country adjusted to the global realities. The IMF forecast growth of 5% in 2014. Most certainly the telecom sector was continuing to grow.

Market highlights:
The Mobile market in Azerbaijan, having passed the 100% milestone in 2011, continues to grow into 2014 but at a more modest annual rate;
With over 10 million mobile subscribers by end-2013, the total numbers had increased fivefold since 2005;
Of the three major mobile operators Azercell remained the clear market leader with over 40% of the subscriber base; the other two, Bakcell and Azerfon, were both competing vigorously;
Bakcell was running a strong second with over 30% market share, while relative newcomer Azerfon was in third place on 23%;
Significantly, Azerfon had been awarded a 3G licence in 2009 and remained the sole 3G operator in the country until end-2011;
Bakcell and Azercell were eventually granted 3G licences, both launching 3G services in 2012;
As the fixed-line market slowed, penetration was a little over 19% coming into 2014;
The evidence suggests plenty of strong growth in Azerbaijan's internet usage;
Mobile broadband had rocketed from just 19,000 in 2009 to 4.1 million by end-2013;
The country's first satellite, Azerspace-1, was successfully launched into orbit in 2013;
After long delays, the MNP scheme was introduced by the mobile operators in February 2014;
The government announced that it was preparing to restructure the communications ministry, with a new Ministry of Communications and High Technology (MCHT) being created in 2014;
Azerbaijan has initiated a long-term e-government project;
The country was generally making good progress in implementing its plans to privatise state-owned telecom enterprises; however, the critical privatisation of Aztelekom had again been postponed - for some years.

Companies covered in this report include:
Aztelekom; AzEuroTel; Azercell; Bakcell; Azerfon; Catel: Eurasiacom

This report provides an overview of the trends and developments in the telecommunications markets in Azerbaijan. Subjects covered include:
Key Statistics;
Market and Industry Overviews;
Major Operators (Mobile and Fixed);
Regulatory Environment;
Mobile Market Voice and Data;
Internet Market, including Broadband (fixed and mobile);
Scenario forecasts for fixed-line, internet and mobile subscribers for 2015, 2020.

Table Of Contents

Azerbaijan - Telecoms, Mobile, Broadband and Forecasts
1. Executive summary
2. Key statistics
3. Country overview
3.1 Background
3.2 Economy
3.2.1 World Trade Organization (WTO)
4. Azerbaijan's telecommunications market
4.1 Overview
4.2 Foreign investment
4.3 Ministry report on outcomes July 2014
4.4 Action Plan for 2011-2015
5. Regulatory environment
5.1 Ministry of Communications and High Technology (MCHT)
5.2 Proposed telecom regulator
5.3 Legislation
5.4 Privatisation plans
5.5 National Communication Technologies Strategy
5.6 Promotion of ICT sector
6. Fixed network operators in Azerbaijan
6.1 Aztelekom
6.2 AzEuroTel
6.3 EurAsiaCom (formerly Terracom Inc/Fire Telecom)
7. Telecommunications infrastructure
7.1 National telecom network
7.2 Fixed-line statistics
7.3 Forecasts fixed-line market 2015; 2020
7.3.1 Next Generation Network (NGN)
7.3.2 Optical fibre networks
7.4 International infrastructure
7.4.1 Azerbaijan's satellites
7.4.2 Trans-Asia-Europe (TAE) cable network
7.4.3 Europe Persia Express Gateway (EPEG)
8. Internet market
8.1 Overview
8.2 Internet statistics
8.3 Forecasts internet services 2015; 2020
8.4 Computers for schools
8.5 Cybercrime
8.6 E-Government
8.7 ISP market
9. Broadband market
9.1 Overview
9.2 Broadband statistics
9.3 Trans-Eurasian Information Superhighway
9.4 WiMAX
9.4.1 AzQtel
10. Mobile communications
10.1 Overview of Azerbaijan's mobile market
10.1.1 Nakhichevan enclave
10.2 Mobile statistics
10.3 Forecasts mobile market 2015; 2020
10.4 Mobile Number Portability (MNP)
10.5 Mobile technologies
10.5.1 Trunk Mobile Radio (TMR)
10.5.2 Third Generation (3G) services
10.5.3 Fourth Generation (4G) / Long Term Evolution (LTE)
10.5.4 Voice-over-LTE (VoLTE)
11. Major mobile operators
11.1 Azercell
11.1.1 Overview
11.1.2 Background
11.2 Bakcell
11.2.1 Overview
11.2.2 Background
11.3 Azerfon (Nar Mobile)
11.3.1 Overview
11.3.2 Background
11.3.3 Corporate structure
11.4 Catel
12. Broadcasting and digital media
13. Notes on forecasting
14. Related reports
Table 1 Country statistics Azerbaijan 2014
Table 2 Telecom revenue and investment statistics 2012
Table 3 Telephone network statistics 2013
Table 4 Internet user statistics 2013
Table 5 Mobile statistics 2013
Table 6 National telecommunications authority
Table 7 Azerbaijan's GDP real growth rate 2006 - 2015
Table 8 Foreign investment in Azerbaijan's telecom sector 2006 - 2013
Table 9 Historical - Fixed lines in service, annual growth and teledensity 1995 - 2004
Table 10 Fixed lines in service, annual growth and teledensity 2005 - 2014
Table 11 Forecast fixed-line subscribers 2015; 2020
Table 12 Historical - Internet users, annual growth and penetration 1995 - 2004
Table 13 Internet users, annual growth and penetration 2005 - 2014
Table 14 Historical - Internet subscribers 1997 - 2004
Table 15 Fixed internet subscribers and penetration 2005 - 2014
Table 16 Internet access by household 2002 - 2014
Table 17 Internet bandwidth capacity 2001 - 2014
Table 18 Forecast fixed internet subscribers 2015; 2020
Table 19 Fixed broadband subscribers and penetration 2003 - 2014
Table 20 Broadband subscribers and household overview 2013
Table 21 DSL broadband subscribers 2005 - 2013
Table 22 FttX broadband subscribers 2005 - 2013
Table 23 Wireless broadband subscribers and penetration 2009 - 2014
Table 24 Mobile broadband subscribers and penetration 2009 - 2014
Table 25 Historical - Mobile subscribers, annual growth and penetration 1994 - 2004
Table 26 Mobile subscribers, annual growth and penetration 2005 - 2014
Table 27 Mobile operators, subscribers and annual change 2012
Table 28 Mobile operators by share of total mobile market September 2013
Table 29 Prepaid mobile subscribers 2005 2013
Table 30 Mobile SMS volume 2008 2013
Table 31 Forecast mobile subscribers 2015; 2020
Table 32 Azercell mobile subscribers and market share 2003 - 2014
Table 33 Bakcell mobile subscribers 2002; 2005 2006; 2010 - 2013
Table 34 Azerfon mobile subscribers 2007 - 2013
Table 35 Key broadcasting statistics - 2013
Table 36 DTH subscribers 2001 2003; 2010 2013
Chart 1 Fixed lines in service and teledensity 2005 2014
Chart 2 - Internet users and penetration - 2005 2014
Chart 3 - Fixed internet subscribers and penetration - 2005 2014
Chart 4 - Fixed broadband subscribers and penetration 2007 - 2014
Chart 5 - Mobile subscribers and penetration - 2005 2014
Chart 6 - Mobile operators by share of total mobile market 2013

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