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Azerbaijan - Telecoms, Mobile, Broadband and Forecasts

Azerbaijan - Telecoms, Mobile, Broadband and Forecasts

A recovering economy helps boost overall growth in Azerbaijan's broadband sector

Coming into 2013 Azerbaijan's mobile subscriber numbers had passed the 10 million milestone (107% penetration). After more than a decade of very strong growth, the rate of expansion had moderated to around 10% per annum by 2011 and continuing in this mode in 2012/2013. Operator Azercell continues to lead the market, but its earlier dominance was being slowly eroded and market share had fallen to 43%, down from the more than 50% it held in years past. The second and third ranked operators, Bakcell (33%) and relative newcomer Azerfon (24%) were both throwing out a 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 more than 18% by the start of 2013 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. Government-owned Aztelekom has long been the country's main provider of basic telephone services, being directly controlled by the ministry.

In the meantime, the number of internet users in the country, having increased by 100% between 2008 and 2010, had passed 5 million in 2012. Fixed broadband subscriptions had increased from 100,000 in 2009 to 1.3 million in 2012 and strong growth was continuing. In the meantime, mobile broadband had rocketed from just 19,000 in 2009 to 3.1 million by end-2012.

In early 2013 Azerbaijan put its first telecommunications satellite into orbit. The Azerspace-1 satellite was set to provide communications coverage for Azerbaijan, Central Asia, Europe and Africa over a designed mission life of 15 years. It was designed to provide digital broadcasting, internet access and data transmission, among other services. The government subsequently announced that Azerspace-2, the country's second telecommunications satellite, would be launched in 2018.

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.

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. In 2012 and into 2013, 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:

The Mobile market in Azerbaijan, having passed the 100% milestone in 2011, continues to grow but at a more modest annual rate of around 10%;
With over 10 million mobile subscribers by early 2013, the total numbers had increased fivefold since 2005;
Of the three major mobile operators Azercell remained the clear market leader with 43% of the subscriber base, Bakcell and Azerfon both competing vigorously and making their presence felt;
Bakcell was running a strong second with 33% market share, while relative newcomer Azerfon was in third place on 24%;
Significantly, Azerfon had been awarded a 3G licence in 2009 and remained the sole 3G operator in the country until end-2011;
Bakcell and Azercell were eventually granted 3G licences, both launching 3G services in 2012;
After long delays, a Mobile Number Portability (MNP) system was put in place in August 2013;
Fixed-line penetration in Azerbaijan was a little over 18% coming into 2013; further growth was taking place but at a relatively slow rate;
The evidence suggests plenty of strong growth in Azerbaijan's internet usage; user penetration has expanded from 12% at the start of 2007 to pass 50% during 2012;
Fixed broadband internet subscriptions were growing particularly strongly, increasing from just 15,000 in 2007 to 1.3 million by end-2012;
In the meantime mobile broadband had rocketed from just 19,000 in 2009 to 3.1 million by end-2012;
The country's first satellite, Azerspace-1, was successfully launched into orbit in February 2013;
The government announced that Azerspace-2 was scheduled for launch in 2018;
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; Catel: Eurasiacom
Azerbaijan - key telecom parameters 2011 - 2013
Category | 2011 | 2012 (e) | 2013 (e)
Fixed-line services: | | |
Total No. of subscribers | 1.68 million | 1.73 million | 1.78 million
Internet services: | | |
Total No. of fixed internet subscribers | 1.32 million | 1.60 million | 1.90 million
Mobile services: | | |
Total No. of subscribers | 9.6 million | 10.2 million | 11.0 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;
Mobile Market Voice and Data;
Internet Market, including Broadband (fixed and mobile);
Scenario forecasts for fixed-line, 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 Foreign investment
4.3 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)
7.3 International infrastructure
7.3.1 Azerbaijan's satellites
7.3.2 Trans-Asia-Europe (TAE) cable network
7.3.3 Europe Persia Express Gateway (EPEG)
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
Table 1 Country statistics Azerbaijan 2013
Table 2 Telecom revenue and investment statistics 2011
Table 3 Telephone network statistics 2012
Table 4 Internet user statistics 2012
Table 5 Mobile statistics March 2013
Table 6 National telecommunications authority
Table 7 Azerbaijan's GDP real growth rate 2006 - 2014
Table 8 Foreign investment in Azerbaijan's telecom sector 2006 - 2011
Table 9 Historical - Fixed lines in service, annual growth and teledensity 1995 - 2004
Table 10 Fixed lines in service, annual growth and teledensity 2005 - 2012
Table 11 Forecast fixed-line subscribers 2015; 2020
Table 12 Historical - Internet users, annual growth and penetration 1995 - 2004
Table 13 Internet users, annual growth and penetration 2005 - 2013
Table 14 Historical - Internet subscribers 1997 - 2004
Table 15 Fixed internet subscribers and penetration 2005 - 2013
Table 16 Internet access by household 2002 - 2013
Table 17 Internet bandwidth capacity 2001 - 2012
Table 18 Forecast fixed internet subscribers 2015; 2020
Table 19 Fixed broadband subscribers and penetration 2003 - 2013
Table 20 Broadband subscribers and household overview 2012
Table 21 DSL broadband subscribers 2005 - 2012
Table 22 Wireless broadband subscribers and penetration 2009 - 2012
Table 23 Historical - Mobile subscribers, annual growth and penetration 1994 - 2004
Table 24 Mobile subscribers, annual growth and penetration 2005 - 2013
Table 25 Mobile broadband subscribers and penetration 2009 - 2013
Table 26 Mobile operators, subscribers and annual change 2012
Table 27 Mobile operators by share of total mobile market 2012
Table 28 Forecast mobile subscribers 2015; 2020
Table 29 Azercell mobile subscribers and market share 2003 - 2013
Table 30 Bakcell mobile subscribers 2002; 2005 2006; 2010 - 2012
Table 31 Azerfon mobile subscribers 2007 - 2012
Chart 1 Fixed lines in service and teledensity 2001 2013
Chart 2 - Internet users and penetration - 2005 2013
Chart 3 - Fixed internet subscribers and penetration - 2005 2013
Chart 4 - Mobile subscribers and penetration - 2005 2013
Chart 5 - Mobile operators by share of total mobile market 2012

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