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Armenia - Telecoms, Mobile & Internet


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The Armenia - Telecoms, Mobile & Internet report includes all BuddeComm research data and analysis on this country. Covering trends and developments in telecommunications, mobile, internet, broadband, infrastructure and regulation. Please review the Executive Summary and Table of Contents for more details.


Executive summary

The telecommunications sector in Armenia went into decline following the collapse of the former Soviet Union. Fixed-line teledensity fell by around 2% partly due to the prevailing socio-economic instability in the region triggered by the collapse of the Soviet Union. But more significant a factor was that the country had failed to embrace any vigorous reform in the telecom sector.

With steadily improving economic conditions, the telecoms sector has nevertheless been slow to respond. In the 2006/07 period positive signs were emerging for the sector, however; despite fixed line expansion continuing to be flat, mobile subscriber numbers were increasing by around 75% annually for a number of years, helped no doubt by the introduction of competition into the mobile market in 2005. Growth in mobiles had slowed to 30% annually coming into 2009 as the faltering Armenian economy started to have a negative effect on the telecom market.

Armenia’s progress to a more competitive market has been slow. ArmenTel, the country’s national telecom provider, was granted the exclusive right to provide all telecommunications services in Armenia, including public switched telephony services and mobile telephony, until 2013. As a consequence of this monopoly, no other company was able to provide international satellite services. The one segment of the market initially exempt from this monopoly was Internet services.

Greek company Hellenic Telecommunications Organisation (OTE) invested US$142.5 million in 1998 for a 90% equity stake in ArmenTel. The remaining 10% was retained by the Government of Armenia. OTE agreed to develop and expand the telecom infrastructure in Armenia, including the digitisation of the Public Switched Telephone Network. OTE also agreed to invest US$300 million in the country’s telecommunications network by 2003, of which US$100 million was to be invested in ArmenTel.

However, amid growing dissatisfaction over the performance of the country’s telecoms network, in November 2004 the government was under increasing pressure to do something about the ArmenTel monopoly. It reached a compromise agreement with ArmenTel to end its exclusive rights to provide a range of services, including GSM mobile services, satellite and mobile radio communications services in exchange for various other concessions, including the stipulation that only one alternative mobile operator would be allowed to operate in Armenia until 2009. ArmenTel was to also retain sole rights to Internet telephony and the use of fibre optic cables. The government subsequently made a controversial decision to choose Armenia’s second mobile operator without transparent and competitive bidding; Karabakh Telecom (KT), a little-known Lebanese-owned company, was officially awarded a licence to operate a GSM network in Armenia.

OTE put its 90% equity in ArmenTel up for sale in June 2006, offered to the market through a bidding process. Russian operator VimpelCom was the successful bidder, finally acquiring the stake in November 2006. VimpelCom finalised the deal in April 2007 acquiring the remaining 10% of the shares of ArmenTel from the Government of Armenia to raise its equity holding in the company to 100%. In December 2007 the Public Services Regulatory Commission (PSRC) said that the government of Armenia planned to award a third mobile licence in 2008 based on the GSM 900/1800 standard. There was to be a call for an international tender with bidding for the licence which was due to start in May 2008 and to be completed by August 2008. A new commission, to be established by the government, would oversee the process. Orange Armenia was awarded a 15-year mobile operator licence in November 2008. The newly licensed operator was 100% owned by France Telecom (Orange).

Key highlights:

By December 2008 mobile penetration in Georgia had reached 85%, having increased more than fivefold in just three years;
In late 2008 and into 2009, however, the mobile market was showing signs of stalling, as the country’s faltering economy impacted on the telecom sector;
On the positive front, a third mobile licence had been issued and the new player Orange Armenia had already invested heavily in its network and was aiming for a launch late in 2009;
It was also encouraging that ArmenTel had launched its 3G mobile service in October 2008 and had signed up almost 20,000 subscribers by March 2009;
Fixed-line growth in Armenia was slow; with still only 67% of the network digital by mid-2009, the big challenge facing ArmenTel was to complete the digitalisation program;
While there is a growing Internet awareness in the country, the Internet segment of the market remains sluggish, with user penetration down around 6% in early 2009;
Broadband Internet development has also been poor; the advent of wireless broadband/WiMAX service offerings in 2008/09 could allow for faster expansion, however;
Armenia’s economy experienced a serious setback in 2008/09; it is hoped the progress being made in telecom sector reform would not suffer as a consequence of troubles in the wider economy.Armenia - key telecom parameters - 2008 - 2009
Category20082009 (e)

Fixed-line services:
Total number of subscribers650,000675,000
Annual growth4%4%
Fixed-line penetration (population)21%22%
Internet:

Total number of subscribers1120,000127,000
Annual growth7%6% Internet subscriber penetration (population)4%4% Mobile services:
Total number of subscribers (million)2.56 2.90
Annual growth37%14%
Mobile penetration (population)85%94%
(Source: BuddeComm)
Note: 1Estimates for both 2008 and 2009.

This report provides an overview of the trends and developments in the telecommunications markets in Armenia. Subjects covered include: Key Statistics; Market and Industry Overviews; Major Operators (Mobile and Fixed) Regulatory Environment; Infrastructure; Mobile Market; Internet Market, including Broadband.

  • Executive summary
    • Table Armenia - key telecom parameters - 2008 - 2009
  • Key statistics
    • Table Country statistics Armenia - 2009
    • Table Telecom revenue and investment statistics - 2005
    • Table Telephone network statistics - 2009
    • Table Internet user statistics - 2009
    • Table Mobile statistics - June 2009
    • Table National telecommunications authorities
    • Country overview
  • Telecommunications market
    • Overview of Armenia's telecom market
  • Regulatory environment
    • Telecommunications Law 1998
    • Foreign investment
    • ArmenTel monopoly
      • Structure
      • Legal challenge
      • Ending of monopoly
    • Regulatory developments
    • Membership of World Trade Organization (WTO)
  • Fixed network operators in Armenia
    • ArmenTel
  • Telecommunications infrastructure
    • Local and national
      • Table Fixed lines in service and teledensity - 1991 - 2011
    • International
  • Internet market
    • Overview
      • Internet statistics
        • Table Internet users - 1994 - 2011
        • Table Internet subscribers - 2000 - 2010
        • Table Internet bandwidth capacity - 2001 - 2007
        • Table Broadband subscribers - 2003 - 2010
    • WiMAX
    • VoIP
    • ISP market
      • Arminco Global Telecommunications
      • Armenian Freenet
      • Web Ltd (WEB.AM)
      • Armenian Datacom Company (ADC)
  • Mobile communications
    • Overview of Armenia's mobile market
      • Table Mobile subscribers - 1996 - 2011
      • Table Mobile operators, subscribers and annual change - March 2009
      • Table 3G mobile subscribers - 2008 - 2009
    • Major mobile operators
      • ArmenTel (ArmGSM)
        • Table Beeline (ArmenTel) - mobile subscribers and ARPU - 2008 - 2009
      • K-Telecom (VivaCell)
      • Orange Armenia
        • Table Orange Armenia - mobile subscribers - 2009 - 2010

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