Despite an economic downturn Azerbaijan is still growing its telecom sector
Coming into 2012 Azerbaijan’s mobile subscriber base had passed the 10 million milestone (109% penetration). Mobile subscriber growth had moderated to 10% per annum in 2011 and similar growth was continuing into 2012. Operator Azercell continues to lead the market, but its earlier dominance was being slowly eroded and market share had fallen to 44%, down from the more than 50% it held in years past. The second and third ranked operators, Bakcell and newcomer Azerfon, were both throwing out a big challenge to Azercell’s number one ranking.
Although the fixed network provides good national coverage, there was little sign of a growth surge in this market; but the country could still claim a positive fixed-line penetration of 18% by the start of 2012 and growth was continuing along a reasonable path. Around 80% of the fixed lines are in urban areas, despite 50% of the population living in rural areas.
In the meantime, the number of internet users in the country, having increased by 100% between 2008 and 2010, was approaching an estimated 5 million in 2012. Broadband subscriptions had increased to 100,000 by 2009 and then the market saw a further 400,000 broadband subscribers added in 2010, according to International Telecommunications Union (ITU) figures; the 500,000 broadband subscribers at the start of 2011 was up from just 15,000 three years earlier. The broadband market more than doubled in size again in 2011.
On the back of a strong economy, Azerbaijan has made good progress in the building of its telecommunications and information technology sectors. It has had to overcome a number of major problems in the process, including:
poor telecom infrastructure inherited from the past;
low public awareness and understanding of computer technology;
the high cost of computer equipment in comparison to the average salary;
very high tariffs for satellite connections due to a monopoly held by the Ministry of Communications and Information Technologies (MCIT).
A substantial platform for the ongoing development of Azerbaijan’s telecom sector was put in place more than a decade ago. By 2001 there were four joint-ventures offering telephone services, two mobile operators, and a number of Internet Service Providers in the country. All these ventures, established under the MCIT, were providing a range of basic telephone services, including mobile services. Prices varied considerably depending on the different cost of services offered to these companies by the ministry.
Government-owned Aztelekom has long been the country’s main provider of basic telephone services, being directly controlled by the ministry. A second operator, AzEuroTel, won a licence to provide international communication services as long ago as 1999.
The expansion of the country’s telecom sector has taken place in the context of a very strong developing economy. Azerbaijan has seen rapid economic expansion in recent times, recording annual GDP growth levels of up to 30% a few years back. However, the economy suffered a major setback following the Global Financial Crisis. The poor state of the global economy saw a big drop in Azerbaijan’s oil and gas exports; real GDP grew by just 0.1% in 2011. Into 2012, however, there were all the signs of a recovery, as the country adjusted to the global realities. Most certainly the telecom sector was continuing to grow.
Mobile penetration in Azerbaijan having passed the 100% milestone in early 2011, growth was continuing into 2012 at an annual rate of around 10%
With over 10 million mobile subscriber by early 2012, the numbers had increased fivefold since 2005;
Two additional operators, Azerfon and Catel, having joined Azercell and Bakcell in the mobile market in 2007, competition has hotted up with Azerfon in particular making its presence felt;
Market leader Azercell was losing market share but still clung to 44% of the market by end-2011;
Bakcell was running a strong second, with newcomer Azerfon in third place having already grabbed 23%;
Most importantly, Azerfon had been awarded a 3G licence in late 2009 and remained the sole 3G operator in the country until end-2011;
Bakcell and Azercell were finally granted 3G licences, both launching services in January 2012;
Fixed-line penetration in Azerbaijan had reached 18% by 2012; further growth was happening but at a relatively slow pace;
All the signs suggest strong growth in Azerbaijan’s internet usage; with user penetration expanding from 12% at the start of 2007 to reach 49% by the beginning of 2012;
Broadband internet subscriptions were growing particularly strongly, increasing from 15,000 in 2007 to almost one million by end 2011; the country could claim a broadband penetration of 11%, with broadband subscriptions supporting almost 80% of all internet connections;
The country has generally made good progress in implementing its plans to privatise state-owned telecom enterprises; however, the critical privatisation of Aztelekom had again been postponed - for some years.
Companies covered in this report include:
Aztelekom; AzEuroTel; Azercell; Bakcell; Azerfon; Eurasiacom
Azerbaijan - key telecom parameters – 2011 - 2012
Category | 2011 | 2012 (e)
Fixed-line services: | |
Total No. of subscribers | 1.68 million | 1.75 million
Internet services: | |
Total No. of subscribers | 1.3 million | 1.7 million
Mobile services: | |
Total No. of subscribers | 10.1 million | 11.3 million
This report provides an overview of the trends and developments in the telecommunications markets in Azerbaijan.
Subjects covered include:
Market and Industry Overviews;
Major Operators (Mobile and Fixed);
Mobile Market – Voice and Data;
Internet Market, including Broadband (fixed and mobile);
Scenario forecasts for Fixed, Internet and Mobile subscribers for 2015, 2020.