Executive summary
With a GDP per capita almost equal to Russia, Kazakhstan has a booming telecom market
Although growth slowed significantly in 2009, Kazakhstan has continued to experience a booming telecom market that include? a mobile penetration of 130% by early 2011. This has come about on the back of a growing economy and a program of positive regulatory reform in the telecom sector. Legislation adopted in 2004 largely laid the foundation for liberalisation and development of the telecom sector and put an end to the monopoly enjoyed by Kazakhtelecom, the state-controlled telecom operator.
The rapid and successful development of telecommunications in the country encouraged a number of foreign service providers and suppliers to establish a presence in this emerging market. Since 1992, international operators and manufacturers have been active in Kazakhstan in providing services and installing state-of-the-art equipment, especially as part of the country’s international telecom network. Companies such as Motorola, Lucent, Siemens, Alcatel, Nokia, Daewoo and Nortel Networks have all been active in the market. Recognising the long-term potential of this market, many foreign telecom companies have been looking to invest and form partnerships with local telecom companies.
By 2005 four private operators had been licensed to provide international and long-distance services in competition with the incumbent Kazakhtelecom. They were state-railway subsidiary TransTelecom, KazTransCom (a subsidiary of the national oil company), Ducat and Astel. Up to 1,500 new telecom service providers of various kinds had been licensed by 2005.
The key drivers in the telecom sector included:
- the deployment of Kazakhtelecom’s fully-digital national telecom network based on local and long-distance switches and fibre optic lines linking all major cities in the country;
- efforts to improve international connectivity and increase both mobile and fixed-line subscribers; the continuing digitalisation of exchanges;
- the further reform of telecommunications legislation;
- the process of accession to the World Trade Organization.
Kazakhstan had a relatively strong fixed-line penetration (25 telephone lines per 100 inhabitants by 2011), with six operators providing fixed-line telephone services to about four million subscribers. There had been long waiting lists for fixed-line telephone services over the years. Despite the opening up of the market the bulk of the country’s fixed services were being provided by of Kazakhtelecom.
In the meantime and by contrast the country’s mobile market has been booming since 2000, no doubt boosted to some extent by the long delays in obtaining fixed-line services. The number of mobile services had exceeded fixed-lines by 2004. Demand for mobile services was so strong that in 2006 that the government went on to auction a third GSM licence (and fourth mobile operator licence), which was duly awarded to NeoTelecom, a subsidiary of Kazakhtelecom. NeoTelecom then launched its mobile service in 2007.
Of special note has been the recent healthy growth in internet activity in Kazakhstan, with the move to broadband access in particular taking place at a rapid rate. Fixed broadband subscribers as a proportion of the population had reached a healthy 6% by 2011, with the market likely to continue its current rapid expansion.
Major highlights:
- After a decade of strong growth in Kazakhstan’s mobile market, there was a slowing in the market;
- With mobile penetration around 130% in early 2012, the market was continuing to grow but was expected to start saturating in the next year or so;
- Broadband internet was quickly expanding on top of a general upturn in demand for internet services;
- There had been a significant shift to broadband access in 2009 as the proportion of internet subscribers using broadband shifted from 43% to 76% in that twelve-month period;
- Kazakhstan, despite the considerable presence of incumbent Kazakhtelecom across the market, was continuing to benefit from a diversified market that offered an energetic and competitive environment, especially in the mobile market;
- On the economic front, after an eight-year period in which GDP had been growing at an annual rate in excess of 8%, 2008 saw a major slowdown in the Kazakhstan economy with GDP growth falling to 3%; 2009 saw growth fall even further (to around 1%) as the full impact of the global financial crisis hit.
- At least a modest recovery in the local economy was evident in the short term with possible even more achievable; GDP growth of around 7% was estimated/expected by the IMF for 2010 and 2011.
Kazakhstan – key telecom parameters – 2010 - 2011
Category
| 2010
| 2011 (e)
|
|---|
Fixed-line services:
|
|---|
Total number of subscribers (million)
| 4.0
| 4.2
|
Annual change
| 5%
| 5%
|
Fixed-line penetration (population)
| 25%
| 26%
|
Fixed-line penetration (household)
| 6.4%
| 6.5%
|
Internet:
|
|---|
Total number of internet subscribers (million)
| 2.5
| 3.4
|
Annual change
| 39%
| 36%
|
Internet subscriber penetration (population)
| 16%
| 21%
|
Fixed broadband subscribers (million)
| 0.75
| 0.85
|
Broadband penetration (population)
| 5%
| 5%
|
Mobile services:
|
|---|
Total number of subscribers (million)
| 19.8
| 21.0
|
Annual change
| 16%
| 6%
|
Mobile penetration (population)
| 123%
| 129%
|
(Source: BuddeComm)
This report provides an overview of the trends and developments in the telecommunications markets in Kazakhstan. Subjects covered include:
- Key statistics;
- Market and industry overviews;
- Regulatory environment;
- Infrastructure;
- Mobile market;
- Internet market, including broadband;
- A set of scenario forecasts for fixed-line, internet and mobile segments.
