Executive summary
Azerbaijan’s ‘economic dynamism’ is driving the growth of its telecoms sector
Coming into 2011 Azerbaijan’s mobile subscriber base had passed the 9 million milestone (99% penetration). Mobile subscriber growth had moderated to a still healthy figure of almost 20% in 2010 and similarly strong growth was continuing in 2011. Operator Azercell commands a major share of the mobile market (just over 50%), but this dominance was being steadily eroded, especially by the newcomer Azerfon.
Although the fixed network provides good national coverage, there was little sign of a growth surge in this sector; but the country could still claim a fixed-line penetration of over 16% by early 2011 and growth was continuing along a modest path.
In the meantime, the number of internet users, having increased by a total of 100% in 2009/2010, had reached 3.3 million, representing a user penetration of 36% of the population at the start of 2011. Broadband subscriptions had started to grow in 2008 and increased dramatically in 2010, according to International Telecommunications Union (ITU) figures; there were more than 500,000 broadband subscribers in early 2011.
On the back of a dynamic economy, Azerbaijan has been making healthy progress in the building of its telecommunications and information technology sectors. In has confronted 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 a decade ago. By 2001 there were four joint-ventures offering telephone services, two mobile operators, and a number of Internet Service Providers 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 long been the country’s main provider of basic telecom services, being directly controlled by the ministry. A second operator, AzEuroTel, won a licence to provide international communication services as long ago as 1999.
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. This has seen it rank as one of the fastest growing economies in the world. In fact, in Newsweek magazine’s ranking of low income economies by Economic Dynamism published in 2010, saw Azerbaijan in second place, behind China and ahead of India.
Market highlights:
- By early 2011 mobile penetration in Azerbaijan had reached the 100% milestone, with mobile subscriber numbers having increased almost fivefold since 2005;
- The country had seen solid overall growth in its mobile subscriber base, running at an annual rate of just below 20% coming into 2011;
- Two additional operators, Azerfon and Catel, having joined Azercell and Bakcell in the mobile market in 2007, competition has hotted up with Azerfon providing a major challenge to the two established operators;
- By early 2011 Azercell still held more than 50% market share, but new comer Azerfon had already managed to grab almost 20%;
- Most importantly, Azerfon had been awarded a 3G licence in late 2009 and well into 2011 it was still the sole 3G operator in the country;
- Fixed-line penetration in Azerbaijan had reached a healthy 16% by 2011, with further growth happening at a slow pace;
- The country has moved closer to 100% conversion of the fixed network from analogue, with over 90% digital by 2010, up from just 48% in 2003;
- All the signs suggest strong growth in Azerbaijan’s internet usage; with user penetration expanding from 12% at the start of 2007 to reach 36% by the beginning of 2011;
- Broadband internet subscriptions were growing particularly strongly, increasing from 15,000 in 2007 to 500,000 in 2010; this represented a broadband penetration of slightly over 5%, with plenty more room for growth;
- The country has made good progress in the privatising of 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; Eurasiacom
Azerbaijan - key telecom parameters – 2010 - 2011
Category
| 2010
| 2011 (e)
|
|---|
Fixed-line services:
|
|
|
|---|
Total number of subscribers
| 1.50 million
| 1.58 million
|
Annual growth
| 7%
| 5%
|
Fixed-line penetration (population)
| 16%
| 17%
|
Internet:
|
|
|
|---|
Total number of subscribers
| 700,000
| 850,000
|
Annual growth
| 44%
| 21%
|
Internet subscriber penetration (population)
| 8%
| 9%
|
Mobile services:
|
|
|
|---|
Total number of subscribers
| 9.1 million
| 9.7 million
|
Annual growth
| 17%
| 7%
|
Mobile penetration (population)
| 99%
| 104%
|
(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.
