Executive summary
Coming into 2009 there were around 6 million mobile subscribers (70% penetration) in Azerbaijan, with Azercell continuing to command a majority share of the market (almost 60%), but this dominance was being slowly eroded. Although the fixed network provides good national coverage, there was little sign of a growth surge in this market; fixed-line penetration edged up past 15% by end-2008. At the same time Internet users in the country reportedly numbered 1.5 million, while broadband subscriptions increased fourfold in 2008, according to International Telecommunications Union (ITU) figures.
On the back of a strong economy, Azerbaijan has been making healthy progress in the building its telecommunications and information technology sectors. In doing so it has had to confront a number of major problems 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 & Information Technologies (MCIT).
By 2001 there were four joint ventures offering telephone services, two mobile operators, and a number of Internet Service Providers (ISPs) operating 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.
Government-owned Aztelekom has been the country’s main telecom service provider, being directly controlled by the MCIT. A second operator, AzEuroTel, won a licence to provide international communication services in August 1999.
In June 2006, in a move that suggested a widening interest in the Azerbaijan telecom sector, a small UK-based company, Polton Vencars, announced plans to develop telecommunications services in Azerbaijan. It intended to invest US$4 million in Bakinsky Telegraph, a company it had earlier acquired at auction, over a four year period to develop 3G mobile services using Code Division Multiple Access (CDMA) technology, as well as dial-up and broadband Internet access services. It also hoped to add triple play services (TV, Internet and fixed-line) to its portfolio. Polton Vencars had acquired an 89.8% stake in Bakinsky Telegraph.
- By early 2009 mobile penetration in Azerbaijan had reached 70%, with mobile subscriber numbers having increased fourfold in just over four years;
- The country had seen solid overall growth in its mobile subscriber base, running at an annual rate of about 23% coming into 2009;
- With two new mobile operators, Azerfon and Catel, having entered the market, competition was hotting up and the battle was on for market share;
- Fixed-line penetration in Azerbaijan had reached a healthy 15% by early 2009, but further growth was slow;
- The country has moved closer to 100% conversion of the fixed network from analogue, with 90% digital by early 2009, up from just 48% in 2003;
- All the signs suggest strong growth in Azerbaijan’s Internet usage, with user penetration reported at more than 17% coming into 2009;
- Significantly, broadband Internet subscriptions had increased fourfold in 2008; the 60,000 broadband subscribers by year-end, however, represented a broadband penetration of only 0.7%;
- The country has made good progress in the privatising of state-owned telecom enterprises; however, in 2008 the critical privatisation of Aztelekom was again postponed - for some years.
Azerbaijan - key telecom parameters – 2008 - 2009
Category
| 2008
| 2009 (e)
|
|---|
Fixed-line services:
|
|
|
|---|
Total number of subscribers
| 1.3 million
| 1.4 million
|
Annual growth
| 5%
| 7%
|
Fixed-line penetration (population)
| 15.0%
| 15.3%
|
Internet:
|
|
|
|---|
Total number of subscribers
| 410,000
| 600,000
|
Annual growth
| 89%
| 46%
|
Internet subscriber penetration (population)
| 5%
| 7%
|
Mobile services:
|
|
|
|---|
Total number of subscribers
| 5.7 million
| 6.9 million
|
Annual growth
| 24%
| 21%
|
Mobile penetration (population)
| 66%
| 78%
|
(Source: BuddeComm)
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;
- Infrastructure;
- Mobile Market – Voice and Data;
- Internet Market, including Broadband.