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Armenia - Telecoms, Mobile and Internet

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Armenia - Telecoms, Mobile and Internet

Mobile broadband subscribers continue to increase in Armenia as overall mobile growth stalls

After a run of strong growth in mobile subscribers, the telecom market in Armenia experienced a major slowdown triggered by the Global Financial Crisis in 2009. There was some recovery in both the economy and the country's telecom market in the following years. By 2014 however mobile subscriber growth had moderated and then stalled. A period of consolidation looked likely as penetration sat at around 115%. With the fixed-line market having gone into decline and a generally slowing in fixed internet expansion, mobile broadband has emerged as the one bright spot in the local market with strong growth over the last few years.

The telecommunications sector in Armenia has been experiencing a rollercoaster ride over the last two decades. The sector slipped into decline following the collapse of the former Soviet Union back in the 1990s, with the fixed-line teledensity falling markedly. This was partly as a consequence of the prevailing socio-economic instability within the region, but more significant a factor was that the country initially failed to embrace any vigorous reform in the telecom sector. Despite steadily improving economic conditions as the country underwent economic reform, the telecoms sector was slow to respond.

Despite the global financial problems and their impact on the Armenian economy, the last few years have seen a number of positive signs in the development of the telecom sector. The mobile segment, having been considerably boosted by the introduction of competition into the market place, has seen subscriber numbers increase almost fivefold since 2006. The internet segment of the market has also been opened up to much wider competition and the market now offers an increasing range of sophisticated services. Internet was the one segment of the market initially exempt from the ArmenTel monopoly.

Problems still exist however. The rate of regulatory change has been slow and seems to have slowed more recently. In 2004 the government reached a compromise agreement with ArmenTel to end its exclusive rights to provide a range of services, including GSM mobile, satellite and mobile radio communications services in exchange for various other concessions, including the stipulation that only one alternative mobile operator would be allowed in Armenia until 2009. ArmenTel was to also retain sole rights to internet telephony and the use of fibre optic cables. Despite the significant dismantling of ArmenTel's monopoly and the licensing of multiple new players since 2007 together with the arrival of a third mobile operator in 2009, the shadow of ArmenTel's monopoly still seems to hang over many aspects of the market. An important, and indeed very positive, regulatory development in the mobile market has the launch of Mobile Number Portability in 2013/2014, with good cooperation by the operators a feature of its introduction.

In the opening up of the mobile market, the government made a controversial decision in choosing a second mobile operator without transparent and competitive bidding; Karabakh Telecom (K-Telecom), a little-known Lebanese-owned company, was officially awarded a licence to operate a GSM network in Armenia. K-Telecom launched its VivaCell service in 2005. Russian telco Mobile TeleSystems (MTS) purchased an 80% stake in K-Telecom in 2007. The Public Services Regulatory Commission (PSRC), the country's telecom regulator, awarded a third mobile licence - to Orange Armenia. The newly licensed operator was 100% owned by France Telecom (Orange). It launched a mobile service in 2009. The launch of 3G services by both ArmenTel and K-Telecom in 2008 gave the mobile sector a major lift; new generation services have formed the basis of a much healthier market with stronger ARPU being reported by the operators.

UCOM, a fixed-line and internet service provider, was granted the country's fourth mobile licence by the PSRC in 2013.
Note: The absence of a complete set of reliable official statistics for Armenia's telecom sector means that estimates have been included where necessary.

Key highlights:

The mobile market in Armenia was on a positive growth path through 2011/2012, having recovered from the serious setback the sector experienced in 2009/2010;
However, in 2013 the mobile market paused as the operators looked for new ways forward;
There were slightly less than four million mobile subscribers in the country by early 2014;
The mobile segment is benefiting from increased competition, with newest player Orange Armenia offering a vigorous presence in the market place;
the PSRC announced in March 2014 that Armenia had achieved 100% geographic coverage for mobile services;
Fixed-line growth in Armenia has been sluggish, actually running flat or going negative since 2009 with no upturn in sight;
ArmenTel finally completed the national digitalisation program, after years of slow progress, effectively achieving 100% national digitalisation by 2012;
Growing internet awareness in the country has seen a surge in internet users; internet user penetration, although only an estimate, appeared to be at around 45% coming into 2014;
As internet take up accelerated, broadband has been booming, with both fixed and mobile broadband growing;
Slightly more than one in four households had fixed connections by end-2013;
The rapid expansion of mobile broadband over the last few years has been a major feature of the local internet market;
The government was set to roll out a National Broadband Network (NBN) with the help of the World Bank;
Mobile Number Portability was introduced in 2013 with the operators establishing a joint enterprise to manage it.

Armenia Key telecom parameters 2012 - 2014
Category | 2012 | 2013 (e) | 2014 (e)
Fixed-line services:
Subscriber penetration | 19% | 19% | 19%
Total number of fixed subscribers (e) | 200,000 | 230,000 | 270,000
Mobile services:
Subscriber penetration | 116% | 113% | 119%
(Source: BuddeComm)

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;
Mobile market;
Internet market, including broadband;
Broadband services, including fixed and mobile.

1. Executive summary
2. Key statistics
2.1 Country overview
2.2 Economy
2.2.1 Overview
2.2.2 IMF assessment of Armenian financial sector
3. Telecommunications market
3.1 Overview of Armenia's telecom market
3.1.1 Telecom sector in the national economy
3.1.2 Nagorno-Karabakh
4. Regulatory environment
4.1 Telecommunications Law 1998
4.2 Foreign investment - background
4.3 ArmenTel monopoly
4.3.1 Structure
4.3.2 Legal challenge
4.3.3 Ending of monopoly
4.4 Regulatory developments
4.4.1 Pre-2010
4.4.2 Mobile Number Portability (MNP)
4.4.3 Orange Armenia granted fixed telephony rights
4.4.4 Armentel fine for intellectual property breech
4.4.5 ISPs and internet billing
4.5 Membership of World Trade Organization (WTO)
5. Fixed-network operators in Armenia
5.1 ArmenTel (Beeline)
5.1.1 Background and ownership
5.1.2 Business development
5.2 Other operators
5.2.1 UCOM
5.2.2 Cornet-AM
5.2.3 GNC-ALFA
6. Telecommunications infrastructure
6.1 National
6.2 International
7. Internet market
7.1 Overview
7.1.1 Internet statistics
7.2 Broadband services
7.2.1 Digital Subscriber Line (DSL)
7.2.2 Fibre to the Building (FttB)
7.2.3 Wireless broadband
7.3 National Broadband Network (NBN)
7.4 VoIP
7.5 ISP market
7.5.1 Overview
7.5.2 Arminco Global Telecommunications
7.5.3 Web Ltd (WEB.AM)
7.5.4 Armenian Datacom Company (ADC)
7.5.5 ArmenTel (Beeline)
7.5.6 UCOM
7.5.7 GNC-Alfa
8. Mobile communications
8.1 Overview of Armenia's mobile market
8.1.1 Mobile statistics
8.1.2 4G / LTE
8.2 Major mobile operators
8.2.1 ArmenTel (Beeline)
8.2.2 VivaCell-MTS (K-Telecom)
8.2.3 Orange Armenia
8.2.4 UCOM
9. Related reports
Table 1 Country statistics Armenia 2013
Table 2 Telephone network statistics 2013
Table 3 Internet user statistics 2013
Table 4 Mobile statistics 2013
Table 5 National telecommunications authorities
Table 6 Armenia's GDP real growth rate 2006 - 2015
Table 7 Historical - Fixed lines in service, annual change and teledensity 1991 - 2004
Table 8 Fixed lines in service, annual change and teledensity 2005 - 2014
Table 9 Historical - Internet users 1994; 2000 - 2004
Table 10 Internet users and penetration 2005 - 2014
Table 11 Historical - Internet subscribers 2000 - 2004
Table 12 Fixed internet subscribers 2005 - 2014
Table 13 Fixed broadband subscribers 2003 - 2014
Table 14 Mobile broadband subscribers 2009 - 2014
Table 15 Overview of fixed broadband/household subscribers 2013
Table 16 Internet bandwidth capacity 2001 - 2013
Table 17 Dial-up internet subscribers 2004; 2010 - 2013
Table 18 ArmenTel (Beeline) fixed broadband subscribers 2009 - 2013
Table 19 ArmenTel (Beeline) fixed broadband ARPU 2011 - 2013
Table 20 Historical - Mobile subscribers 1996 - 2004
Table 21 Mobile subscribers 2005 - 2014
Table 22 Mobile operators, subscribers and annual change 2013
Table 23 Mobile operators by share of total mobile market 2012
Table 24 Mobile operators by share of total mobile market 2013
Table 25 ArmenTel (Beeline) mobile subscribers 2007 - 2013
Table 26 ArmenTel (Beeline) mobile ARPU 2008 - 2013
Table 27 ArmenTel (Beeline) mobile broadband subscribers 2011 - 2013
Table 28 VivaCell-MTS mobile subscribers 2007 - 2013
Table 29 VivaCell-MTS mobile subscribers - prepaid v. postpaid 2013
Table 30 VivaCell-MTS mobile ARPU 2007 - 2013
Table 31 Orange Armenia - mobile subscribers 2009 2013
Table 32 Orange Armenia - mobile broadband subscribers 2009 - 2013
Chart 1 Armenia fixed line and mobile subscribers 2001 - 2011
Chart 2 Fixed lines in service, annual change and teledensity - 2005 - 2014
Chart 3 - Internet users and penetration - 2005 2014
Chart 4 - Fixed broadband subscribers - 2006 2014
Chart 5 - Mobile subscribers, annual growth and penetration - 2005 - 2014
Chart 6 - Mobile operators and market share - 2013
Chart 7 - Mobile subscribers - 2009 - 2013

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