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Azerbaijan - Telecoms, Mobile, Broadband and Forecasts


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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.

Market highlights:

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
(Source: BuddeComm)

This report provides an overview of the trends and developments in the telecommunications markets in Azerbaijan.

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 (fixed and mobile);
Scenario forecasts for Fixed, Internet and Mobile subscribers for 2015, 2020.


1. Executive summary
2. Key statistics
3. Country overview
3.1 Background
3.2 Economy
3.2.1 World Trade Organization (WTO)
4. Azerbaijan’s telecommunications market
4.1 Overview
4.2 Action Plan for 2011-2015
5. Regulatory environment
5.1 Ministry of Communications & Information Technologies (MCIT)
5.2 Legislation
5.3 Privatisation plans
5.4 National Communication Technologies Strategy
5.5 Promotion of ICT sector
6. Fixed network operators in Azerbaijan
6.1 Aztelekom
6.2 AzEuroTel
6.3 EurAsiaCom (formerly Terracom Inc/Fire Telecom)
7. Telecommunications infrastructure
7.1 National telecom network
7.2 Forecasts – fixed-line market – 2015; 2020
7.2.1 Next Generation Network (NGN)
7.2.2 Europe Persia Express Gateway (EPEG)
7.3 International infrastructure
7.3.1 Trans-Asia-Europe (TAE) cable network
8. Internet market
8.1 Overview
8.2 Internet statistics
8.3 Forecasts – internet services – 2015; 2020
8.4 Computers for schools
8.5 Cybercrime
8.6 ISP market
9. Broadband market
9.1 Overview
9.1.1 Broadband statistics
9.2 Trans-Eurasian Information Superhighway
9.3 WiMAX
9.3.1 AzQtel
9.4 Fourth Generation (4G) / Long Term Evolution (LTE)
10. Mobile communications
10.1 Overview of Azerbaijan’s mobile market
10.1.1 Nakhichevan enclave
10.2 Mobile statistics
10.3 Forecasts –mobile market – 2015; 2020
10.4 Mobile Number Portability (MNP)
10.5 Mobile technologies
10.5.1 Trunk Mobile Radio (TMR)
10.5.2 Third Generation (3G) services
10.5.3 Fourth Generation (4G) / Long Term Evolution (LTE)
11. Major mobile operators
11.1 Azercell
11.1.1 Overview
11.1.2 Background
11.2 Bakcell
11.2.1 Overview
11.2.2 Background
11.3 Azerfon (Nar Mobile)
11.3.1 Overview
11.3.2 Background
11.3.3 Corporate structure
11.4 Catel
12. Notes on forecasting
13. Related reports
List of Tables andCharts
Table 1 – Country statistics Azerbaijan – 2011
Table 2 – Telecom revenue and investment statistics – 2010
Table 3 – Telephone network statistics – 2011
Table 4 – Internet user statistics – 2011
Table 5 – Mobile statistics – 2011
Table 6 – National telecommunications authority
Table 7 – Azerbaijan’s GDP real growth rate – 2006 - 2013
Table 8 – Fixed lines in service, annual growth and teledensity – 1995 - 2012
Table 9 – Forecast fixed-line subscribers – 2015; 2020
Table 10 – Internet users, annual growth and penetration – 1995 - 2012
Table 11 – Internet subscribers – 1997 - 2012
Table 12 – Internet access by household – 2002 - 2012
Table 13 – Internet bandwidth capacity – 2001 - 2012
Table 14 – Forecast Internet subscribers – 2015; 2020
Table 15 – Fixed broadband subscribers – 2003 - 2012
Table 16 – Broadband subscribers and household overview – 2011
Table 17 – DSL broadband subscribers – 2005 - 2011
Table 18 – Mobile subscribers, annual growth and penetration – 1994 - 2012
Table 19 – Mobile broadband subscribers – 2009 - 2011
Table 20 – Mobile operators, subscribers and annual change – 2011
Table 21 – Mobile operators by share of total mobile market – 2011
Table 22 – Forecast mobile subscribers – 2015; 2020
Table 23 – Azercell mobile subscribers and market share – 2003 - 2012
Table 24 – Bakcell mobile subscribers – 2002; 2005 – 2006; 2010 - 2011
Table 25 – Azerfon mobile subscribers – 2007 - 2011
Chart 1 – Fixed lines in service and teledensity – 2001 - 2012
Chart 2 – Mobile subscribers and penetration – 2001 - 2012

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