Uzbekistan - Telecoms, Mobile, Broadband and Forecasts

Additional Information

Executive summary

Uzbekistan has been struggling to bring its telecommunications system up to the standard found in developed countries. For a long time the country’s telecom infrastructure generally remained outmoded and inadequate. Nevertheless, over the last decade or so, the situation has been gradually improving due largely to the government’s decision to give national priority to Information and Communications Technologies. Consequently there has been an upward trend in the country’s telecom market, with increased investment in infrastructure, expanding subscriber bases and rising revenues. The government’s strategic policy was to privatise the incumbent operator Uzbektelecom and to open the market to competition in accordance with the country’s aim to join the World Trade Organization.

The telecom sector has been regulated by the Uzbek Agency for Communications and Information, the successor to the Ministry of Communications. In 2005 the Uzbek Agency for Communications and Information approved a telecommunications investment program for the period 2005-2010. Among other things, the program aimed to increase the total number of fixed lines to 2.2 million and achieve 100% digitisation of the network by 2010. Only about two-thirds of the network was digital by 2007, but by March 2009 this has been lifted sharply to 89%, according to the Uzbek Agency for Communications and Information, and looked to be on track to achieve the target by end-2010. The five year program also aimed to accomplish marked improvements in mobile telephone and Internet penetration. By 2010 both these segments of the market had been significantly boosted, with the mobile market in particular having expanded rapidly over the five years. Funding for the investment program was provided by loans and foreign investment, the internal resources of operators and providers, as well as from government funding.

The state-owned national telecom operator, Uzbektelecom, has been responsible for the fixed-line network and services throughout the country. It was originally granted a monopoly on international voice services and VoIP until 2007. In the meantime, it controlled around 98% of local fixed-line telephony services and 96% of international fixed-line services. Little progress had been made in the government’s plans to privatise Uzbektelecom despite several attempts over the last decade to sell off a sizable stake to a foreign investor. The only alternative fixed-line providers were Buzton and East Telecom, but they were servicing only limited numbers of subscribers.

Mobile telephony first arrived in Uzbekistan in 1992; by 2003 there were seven mobile networks offering a range of technologies and standards. All of the mobile operators were majority owned by foreign investors. Some consolidation in the mobile market took place in 2006 when Buztel was absorbed into the Vimpelcom-owned Unitel; it seemed highly likely that further consolidation would occur in the not too distant future.

Prospects for the country’s telecom sector were strong given that combined fixed-line and mobile teledensity was roughly 12% in early 2006, Three years later, by early 2009, substantial progress had been made in terms of network rollout/upgrade and the take up of services by subscribers. The combined fixed-line and mobile teledensity was roughly 67% by end-2009, but almost all the growth had been in the mobile sector, fixed-line penetration was still just below 7%.

While the country’s Internet market had enjoyed considerable growth since 2002, Internet access remained limited for the majority of the country’s population. By end-2005 Internet user penetration stood at just over 4%. However, by early 2010 it had jumped to 17%, with much of that increase in usage coming in 2009. (It is noted that the various sources for statistics on Internet subscribers in Uzbekistan provide limited or contradictory information.)

Major highlights:

By early 2010 mobile penetration in Uzbekistan had moved rapidly to almost 60%, with mobile subscriber numbers having increased to 16.5 million, this was up from 600,000 subscribers in just five years;

After the country’s mobile subscriber base grew by a remarkable 109% in 2008, expansion eased to around 30% in 2009/10;

Three mobile operators - MTS, Unitel and UCell - launched 3G networks in late 2008;

Fixed-line growth in Uzbekistan has been almost non-existent of late, with penetration continuing to hover around 7%;

On the positive front, however, has been the accelerated conversion of the fixed network from analogue to digital with around 90% digital by 2009 and the 100% target likely to be achieved by end-2010;

The published statistics indicate substantial recent growth in Internet usage, with Internet user penetration reported at 17% in early 2010;

There was a surge in broadband Internet subscribers in 2008, followed by further solid growth in 2009/10; the growth was of course all happening from a small base;

the government in Uzbekistan, in the meantime, continues to maintain tight controls on some aspects of Internet usage.Uzbekistan - key telecom parameters - 2009 - 2010

Category20092010 (e)

Fixed-line services:

Total number of subscribers (million)1.861.87

Annual growth0%0%

Fixed-line penetration (population)7%7%

Internet:

Total number of subscribers273,700400,000

Annual growth66%46%

Internet subscriber penetration (population)1%1.5%

Mobile services:

Total number of subscribers (million)16.421.0

Annual growth33%28%

Mobile penetration (population)59%71%

(Source: BuddeComm)This report provides an overview of the trends and developments in the telecommunications markets in Uzbekistan. 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.