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2006 Central Asian Telecoms Statistics and Market Overview

Attention: There is an updated edition available for this report.

This annual report offers a wealth of information on the overall Infrastructure, Fixed and Mobile services and Internet markets in: Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Taijikistan, Turkmenistan, Uzbekistan. Subjects covered include:

Infrastructure Issues
Regulatory issues and government policies regarding infrastructure
Mobile networks, including Value Added Services
Development of Internet services and, where relevant, broadband
Brief overview of major telecommunications carriers and service providers

Armenia’s telecommunications sector has started to grow. There are over 700,000 fixed-line subscribers, together with 640,000 mobile subscribers by March 2006, for a population of almost 4 million people. The level of investment in infrastructure and new services has begun to increase. There are, however, major structural issues to be addressed in the sector. Amid growing dissatisfaction over the performance of the telecoms network, in November 2004 the government reached a compromise agreement with ArmenTel, the country’s national telecom provider, to end its exclusive rights to provide GSM, 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 also allowed to retain sole rights to Internet telephony and the use of fibre optic cables. Previously, ArmenTel had been granted exclusive rights to the provision of all telecommunications services in Armenia until 2013 (apart from data services).

Following the collapse of the former Soviet Union, the telecommunications sector in Armenia had gone into decline. There were already almost 600,000 fixed-line subscribers by the end of 1994, but by the end of 2001 this figure had fallen to below 530,000. This decline was partly explained by the prevailing socio-economic instability in the region at the time of the Soviet Union collapse. But more significant a factor was that the country had failed to embrace any vigorous reforms in the telecom sector. ArmenTel announced in 2002 that it was increasing its commitment to a US$24 million network upgrade plan. The amended program was expected to eventually provide network coverage to around 85% of Armenia’s population.

Azerbaijan is making steady progress in developing its telecommunications sector, but still faces numerous problems. Poor quality infrastructure has been a major ongoing problem. Only around half the telephone lines in the country are digital. The monopoly held by Azerbaijan’s Ministry of Communications & Information (MCIT), among other things, results in the high cost of satellite connections. As well as being a commercial operator through its role in AzTelecom, the ministry is both policy-maker and regulator for the telecoms sector in Azerbaijan. The country’s significant dependence on international funding has also made it difficult for any long-range planning in the development of the sector.

Azerbaijan has had a surge in economic growth. Real GDP growth for 2005 had surged to an estimated 18%, following on a similarly strong growth rate in the previous few years. A rapid increase in capital investment has been largely responsible for the country’s recent impressive growth record. Much of the capital investment has been from foreign sources and mainly directed toward oil and gas field developments.

The government-owned AzTelecom is the country’s main telecommunications service provider and is controlled by MCIT. A second operator, AzEuroTel, won a licence to provide international communication services in 1999. There are also four joint ventures offering telephone services, two mobile operators, and a number of ISPs operating in Azerbaijan. All these ventures have been established under the MCIT.

Georgia, - Although steadily improving its telecommunications infrastructure, as a result of gradual under-investment over decades, Georgia has a network that is outmoded and inadequate. However, there has been an upward trend in the country’s telecom market over the past few years, with rising revenues and increased investment in infrastructure. Mobile communication systems have become increasingly important because the fixed-line facilities provided in many places (particularly in rural and remote areas) are outdated and a mobile phone represents the only effective means of communication.

Positive developments in Georgia that will help the expansion of its telecom infrastructure include the establishment of an independent regulator for the telecom sector and the ongoing privatisation of the two largest fixed-line operators, Sakartvelos Telekomi and Sakartvelos Elektrokavshiri. Competition had arrived for all segments of the telecommunications market, including fixed-line services.

Kazakhstan, has a booming telecoms market that will ensure the rapid introduction of new infrastructure and the upgrade of old equipment (Just over 70% of the national network was digital in early 2006). Legislation adopted in 2004 started the liberalisation of the telecom sector and ending Kazakhtelecom’s monopoly. By April 2005, four companies had been licensed to provide international and long-distance services in competition with Kazakhtelecom and by the end of the year, over 1,000 licences had been issued for the provision of a range of telecom services.

National operator, Kazakhtelecom has launched a program to modernise the country’s telecommunications system. The plan includes modernising the company’s rural telecommunications network using digital telephone exchanges. The company has also been installing satellite facilities in Kazakhstan’s rural and remote areas.

Kyrgyzstan, While much has been done to modernise Kyrgyzstan’s telecom network, geographical conditions, a high incidence of poverty and a still developing legal and regulatory framework are key obstacles to the healthy expansion of telecom operations. The good news is that the market has been opened to both foreign and domestic investors and an independent regulator has been established to oversee the sector. Full liberalisation of the market was set to be achieved by end-2006. As a consequence of this, the sector has been attracting strong foreign investment interest as well as considerable economic and technical assistance of various types. Since the start of market reforms in 1991, the national operator Kyrgyztelecom has been expanding and upgrading its outdated and poorly distributed network. In January 2006, the government approved a decision to put 77.8% of Kyrgyztelecom up for sale.

Much has been done in recent years to modernise the Kyrgyzstan’s telecom network. Telecommunication projects worth more than US$50 million have been implemented to develop the national infrastructure and upgrade systems. These projects have been financed with the help of US$27 million in loans from the World Bank and the European Bank for Reconstruction & Development (EBRD). The program included creating a digital network, digital radio-relay stations and a fibre optic links.

Tajikistan,s telecommunications network is arguably the least developed of all the countries that emerged from the former Soviet Union. With a telecom network that was near total collapse, the government has commenced the daunting task of bringing it up to modern standards. The network is tiny, providing service to an estimated subscriber base 250,000, represents a teledensity of less than 4% coming into 2006. And, significant proportion of the Tajikistan network has not yet been converted to digital. The Ministry has been implementing a plan to progressively replace old equipment. At the same time, a gradual process of liberalisation is under way and over the last decade a number of private operators have been allowed to enter the telecom market, notably in the mobile and Internet sectors. Privatisation of state-owned fixed-line operator, Tajiktelecom, was expected to be achieved by 2007.

Turkmenistan is yet another of the nations that emerged from the former Soviet Union with a relatively underdeveloped telecommunications sector. In fact, it is claimed that telecommunications services in Turkmenistan are the least developed of all the CIS countries. Poor growth in telecoms services, the slow progress in the development of the private sector and continuing state control over most economic activities have not been helpful in supporting the growth of the country’s telecommunications market. Turkmenistan’s Ministry of Communications continues to be both the regulator and policy maker for the telecom sector. Combined fixed-line and mobile teledensity was estimated at just over 10% by end-2005. Fixed line growth has been virtually stagnant for almost a decade, unlike most of its neighbouring countries.

Uzbekistan, has been struggling to bring its telecom system up to the standard found in developed countries. Although steadily improving, some of the telecommunications infrastructure remains outmoded and inadequate. With only 2 million fixed line telephone services (7.4% teledensity) at the end of 2005 for a population of almost 27 million, the national network still has 35% of equipment yet to be replaced or converted to digital. The growth has been sluggish when it is considered that in 1991, the country already had 1.55 million fixed-line subscribers for a penetration of 6.8%.

Certainly, however, the situation has been steadily improving, due largely to the government’s decision to give priority to the telecom sector. In 1996, in what was a significant move, the government started inviting foreign telecom companies to invest in Uzbekistan in their own right. This was followed by the creation in 2000 of Uzbektelekom, a holding company charged with operating the national telecommunications network. There has been an upward trend in the country’s telecom market over recent years, with rising revenues and increased investment in infrastructure. The next step in the government’s strategic program is to privatise the incumbent operator Uzbektelecom and to open the market to competition consistent with the country’s aim to join the World Trade Organization (WTO).

Combined fixed-line and mobile teledensity was estimated at roughly 12% in early 2006, with the mobile sector growing at 100% per annum coming into 2006.

1.1 Key developments
1.1.1 General
1.1.2 Regulatory
1.1.3 Infrastructure
2.1 Overview
2.2 Telecommunications infrastructure
2.3 Regulatory
2.3.1 Market deregulation
2.4 Fixed-line services
3.1 Overview of Armenia’s telecom market
3.2 Fixed network operator in Armenia
3.2.1 Armenia Telephone Company (ArmenTel)
3.3 Telecommunications infrastructure
3.3.1 Local and national
3.3.2 International
4.1 Overview of Azerbaijan’s telecom market
4.2 Fixed network operators in Azerbaijan
4.2.1 Aztelekom
4.2.2 AzEuroTel
4.2.3 Terracom Inc (Fire Telecom) - EurAsiaCom
4.3 Telecommunications infrastructure
4.3.1 National
4.3.2 International
5.1 Overview of Georgia’s telecom market
5.2 Fixed network operators in Georgia
5.2.1 Akhali Kselebi Ltd (NewNet Telecommunications)
5.2.2 Egrisi
5.2.3 Sakartvelos Elektrokavshiri (United Telecom of Georgia)
5.2.4 Sakartvelos Telekomi (Telecom Georgia)
5.3 Telecommunications infrastructure
5.3.1 National telecom network
5.3.2 International infrastructure
6.1 Overview of Kazakhstan’s telecom market
6.2 Fixed network operators in Kazakhstan
6.2.1 Astel
6.2.2 Ducat (formerly Kazintel)
6.2.3 Kazakhtelecom
6.2.4 KazInformTelecom (KIT)
6.3 Telecommunications infrastructure
6.3.1 National
6.3.2 International
7.1 Overview of Kyrgyzstan’s telecoms market
7.1.1 Government projects
7.2 Fixed network operators in Kyrgyzstan
7.2.1 Kyrgyztelecom
7.2.2 Others
7.3 Telecommunications infrastructure
7.3.1 National telecom network
7.3.2 International infrastructure
8.1 Overview of Tajikistan’s telecom market
8.2 Fixed network operator in Tajikistan
8.2.1 Tajiktelecom
8.3 Telecommunications infrastructure
8.3.1 National and international
8.3.2 Infrastructure developments
9.1 Overview of Turkmenistan’s telecom market
9.2 Telecommunications infrastructure
9.2.1 National and international
10.1 Overview of Uzbekistan’s telecom market
10.2 Fixed Network operators in Uzbekistan
10.2.1 Uzbektelecom
10.2.2 Buzton
10.2.3 East Telecom
10.3 Telecommunications infrastructure
10.3.1 National telecom network
10.3.2 Satellite communications
Exhibit 1 - Sakartvelos Elektrokavshiri’s Tbilisi network infrastructure
Exhibit 2 - Kazakhtelecom’s modernisation program for telecommunications - 2004 - 2006

Table 1 - Fixed-line subscribers (selected markets) - March 2006
Table 2 - Telephone network statistics - 2005
Table 3 - Fixed lines in service and teledensity - 1991 - 2005
Table 4 - Telephone network statistics - 2005
Table 5 - Fixed lines in service and teledensity - 1995 - 2005
Table 6 - Telephone network statistics - 2005
Table 7 - Fixed lines in service and teledensity - 1995 - 2005
Table 8 - Telephone network statistics - 2005
Table 9 - Fixed lines in service and teledensity - 1995 - 2005
Table 10 - Telephone network statistics - 2005
Table 11 - Fixed lines in service and teledensity - 1991 - 2005
Table 12 - Telephone network statistics - 2005
Table 13 - Fixed lines in service and teledensity - 1995 - 2005
Table 14 - Telephone network statistics - 2005
Table 15 - Fixed lines in service - 1991 - 2005
Table 16 - Telephone network statistics - 2005
Table 17 - Fixed lines in service and teledensity - 1991 - 2005

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