Despite its open telecom market Kyrgyzstan’s internet sector is finding it difficult to grow.
Note: Statistics in the tables included in this report were revised and updated in August 2013 with the latest available information at the time.
The telecommunications sector in Kyrgyzstan is characterised by an open market that has welcomed both foreign and domestic investors. This has been effectively done in accordance with the requirements set down by the WTO. Under the terms of the country’s accession to the WTO (which took place in 1998), full liberalisation of the telecoms market had been expected to be achieved by end-2006. According to the ITU, Kyrgyzstan had implemented full competition across all segments of its telecoms sector by 2007. Nevertheless, despite the market being ‘fully competitive’ there remains mare to be done on the regulatory front to take full advantage of the reforms now in place. There also remains a culture of poor transparency in some aspects of corporate behaviour; this needs to be addressed if the telecom market is to reach its full potential.
The telecom sector has been part of the final phase of a large scale privatisation program that has been steadily progressing in the country since 1992. The start of market reforms in 1991 saw the state telecommunications agency, Kyrgyztelecom, begin to expand and upgrade its legacy telecom network, which at the time was out-dated and poorly distributed. With the expansion of the telecoms sector, upgraded standards have been adopted. At the same time, a new regulatory authority – the National Communications Agency which later became known as the National Agency for Information Resources, Technologies and Communication - was set up to oversee the sector. At an early stage, Kyrgyztelecom was restructured as a public corporation and the government moved towards a partial sale of the operator to the private sector. Around 10% of the company quickly passed into private hands. After a series of failed attempts to sell off the government shareholding, the government is still holding almost 78% of Kyrgyztelecom.
Private operators, which actively operate in the mobile market and in the provision of internet services, have been investing in the necessary infrastructure. The two big GSM operators – Sky Mobile (Beeline) and MegaCom – have continued to dominate the market, claiming around 85% of the total mobile subscriber base between them. Since the first GSM network was launched in 1998, the number of mobile subscribers has grown rapidly from a few thousand in 1999 to around six million by early 2013. By this stage mobile penetration was around 110%. Growth in the country’s mobile market was continuing to moderate compared with the general growth in recent years. It was likely that the next few years will see annual expansions of less than 10%. With positive indications that the market will continue to steadily expand for some time yet, there is growing interest in the development of mobile broadband and data services.
As for fixed-line services, the country’s national teledensity was 9% in 2012, not much different from the figure a decade earlier. Growth in this market segment had effectively stalled by 2012. Apart from the lack of growth, there was concern over the imbalance in the market place. Teledensity was around 25% in the capital, but only 5% in the rest of the country.
Kyrgyzstan’s internet user penetration was running at 22% in 2012. Personal computers (PCs) remain unaffordable for the vast majority of the population and by 2012 there were only about 7% of households with a PC. Inevitably cybercafés have become the preferred means of accessing the internet in the country. Around 50% of all users are estimated to access the internet in this way. The workplace and educational institutions also make up a significant proportion of access points. Fixed broadband internet services, whilst a growing proportion of the market, are still small in number.
- Coming into 2013 mobile penetration in Kyrgyzstan was around 110%;
- After very strong growth in the three years to 2008, the expansion of the country’s mobile subscriber base had eased, the annual growth rate having fallen to less than 10%;
- Fixed-line penetration in Kyrgyzstan stood at 9% by end-2012, with the market expansion having completely stalled by that stage and no sign of further significant growth in the short term;
- The conversion of the country’s fixed network from analogue was moving slowly, with an estimated 80% digital by 2011, but well up from just 37% in 2004;
- Kyrgyzstan’s internet usage has undergone a healthy expansion over the last few years, with user penetration reported at about 22% coming into 2013;
- Actual internet subscriptions remained generally low (around 3% penetration for fixed internet connections), with the local population making extensive use of public internet access (cybercafés, etc);
- The fixed broadband internet market was relatively small with subscriptions running at around 1% of the population;
- According to the ITU, Kyrgyzstan has implemented full competition across all segments of its telecoms sector.
Kyrgyzstan – key telecom parameters – 2012 - 2013
|Total number of subscribers|
|Total number of fixed internet subscribers|
|Total number of subscribers|
(Source: BuddeComm, based on industry data)
This report provides an overview of the trends and developments in the telecommunications markets in Kyrgyzstan. 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;
- Scenario forecasts for fixed-line, internet and mobile segments.