Executive summary
Kyrgyzstan’s two big mobile operators struggle with their respective ‘headaches.’
Kyrgyzstan’s two big mobile players – Sky Mobile and MegaCom – were struggling with two different but equally uncomfortable problems. For Sky Mobile it was an ownership battle that by 2011 was being fought out in the courts and for MegaCom it was a financial scandal involving alleged corruption within government. There was considerable heat in both issues and they were unlikely to disappear quickly.
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.
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telecommunications agency, Kyrgyztelecom, begin to expand and upgrade its legacy telecom network, which at the time was outdated and poorly distributed.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 was 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 heavily in the relevant infrastructure. Whilst there are four mobile networks in operation, the two big GSM operators – Sky Mobile (Beeline) and MegaCom – havecontinued 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 4.9 million in early 2011 and an estimated 5.4 million coming into 2012. By this stage it was around 100% mobile penetration. Growth in the country’s mobile market was continuing to moderate compared with the general growth in recent years. It was likely that the year would see an expansion of around 10%. Nonetheless, there were positive indications that the market would continue to steadily expand for some time yet.
Market highlights:
- By end 2011 mobile penetration in Kyrgyzstan was around 100%;
- After very strong growth in the three years to 2008, the expansion of the country’s mobile subscriber base had eased with the annual growth rate around 10% in 2010/2011;
- Fixed-line penetration in Kyrgyzstan stood at just under 10% by 2011; however, the annual growth rate for fixed lines was not much above zero;
- 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 21% by 2011;
- On the other hand, actual internet subscriptions remained relatively low in Kyrgyzstan (less than 2% penetration), with the local population making extensive use of public internet access (cybercafés, etc). (Note: On the basis of ITU figures, the ratio of internet users to subscribers was running at about 20 to 1 which is an unusually high ratio compared with other similar markets and may suggest some inconsistency in the figures.)
- The fixed broadband internet market was relatively small with subscriptions running at around 0.3% of the population;
- According to the ITU, Kyrgyzstan has implemented full competition across all segments of its telecoms sector.
- The long-running dispute over the ownership of Sky Mobile continued into 2012, with MTS taking further action in international courts.
Kyrgyzstan – key telecom parameters – 2010 - 2011
Category
| 2010
| 2011 (e)
|
|---|
Fixed-line services:
|
|---|
Total number of subscribers
| 502,000
| 505,000
|
Annual growth
| 1%
| 1%
|
Fixed-line penetration (population)
| 9.4%
| 9.5%
|
Internet:
|
|---|
Total number of subscribers
| 68,900
| 87,000
|
Annual growth
| 46%
| 26%
|
Internet subscriber penetration (population)
| 1.3%
| 1.6%
|
Mobile services:
|
|---|
Total number of subscribers (million)
| 4.9
| 5.4
|
Annual growth
| 9%
| 10%
|
Mobile penetration (population)
| 89%
| 102%
|
(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;
- Infrastructure;
- Mobile market – voice and data;
- Internet market.
