Slow market recovery in Turkmenistan following re-launch of MTS mobile service
Note: The statistics in tables of this report were revised and updated in August 2013 with the latest available information at the time.
Turkmenistan's telecommunications market in this poor and predominantly rural country is relatively small but has been trying boldly to expand in recent years. Its telecom services were considered to be the least developed of all the Commonwealth of Independent States (CIS) countries when they took shape. Since then, poor growth in telecom services can be attributed to a large extent to the slow development of the private sector and state control over most economic activities. Efforts to move towards a more market-oriented economy have been limited. In the telecom sector there has been some progress, but this limited progress has in turn been overwhelmed by significant setbacks.
The state-owned Turkmen Telecom has been the primary provider of public telephone, email and internet services, and through a subsidiary, TM-Cell, it has been operating a GSM mobile network in competition with a private mobile operator, MTS Turkmenistan, since 2005 a subsidiary of the Russian-based MTS. Not surprisingly it has been the mobile services that have been dominating the expansion activity. In 2008 the country saw annual subscription growth in excess of 140%, although growth slowed significantly to about 33% in 2009. As a result, in a busy two-year period Turkmenistan, one of the smallest telecom markets in the Central Asia region, saw its mobile penetration jump from 8% to 30%.
Mobile penetration had reached 63% (3.2 million subscribers) by end-2010, when the market was suddenly thrown into turmoil. The government suspended MTS' mobile licence and then decided not to renew the operator's mobile concession. MTS had been by far the dominant mobile operator up to that stage with around 80% of the mobile subscriber base. It had also rolled out a substantial network, covering around 85% of Turkmenistan's territory. The resolution of the dispute dragged on well into 2012 when the issues between the government and the operator were finally sorted out and MTS was able to re-launch its service in September of that year. In the meantime, over the period of suspension the government-owned TM Cell was the sole provider of mobile services in the country.
Growth of the internet sector in Turkmenistan had been seriously stifled back in 2000 when the four existing independent ISPs were forced out of business due to the government's decision to grant Turkmen Telecom a monopoly over data services. The abrupt closure of the ISPs was consistent with government policy, which required tight control over all communications in the country. Internet access continued to be severely restricted, and the few internet cafes that existed in Ashgabat were closed down in 2002.
After two decades of repression, the incoming president, Gurbanguli Berdymukhamedov, announced in 2007 that the government had re-opened internet cafes in the capital Ashgabat and was set to follow this move in regional centres. One hour of computer time cost about US$4, however, a high price in a country where two-thirds of the population live below the poverty line and the average monthly income was less than US$100. It was not immediately clear how far these reforms would go. By 2010 it was evident that the new president was keeping his promise about keeping the internet cafes open. There were still considerable restrictions on the use of internet, however. In fact, in 2012 Reporters Without Borders included Turkmenistan as one of 12 countries in the world classified as Enemies of the Internet.'
The Turkmenistan telecom market has been dominated by the suspension and eventual reinstatement of MTS Turkmenistan's mobile licence; MTS was effectively not operational from December 2010 to September 2012. A major outcome was that state-owned mobile operator TM Cell, as the sole remaining mobile operator in the market place, was struggling to cope with the demand for service, after more than 2.5 million MTS subscribers were suddenly left without a service provider. Through 2011 and 2012 it was not clear how many working subscribers were being served by TM Cell; ITU statistics reported 3.5 million mobile subscribers by end-2011, all of whom would need to have been receiving service from TM-Cell at that time. Prior to the suspension of MTS' concession at the end of 2010 mobile subscriber numbers in Turkmenistan were increasing strongly from a relatively low base, having just passed the 3.2 million mark, representing a penetration of 63%. By end-2012, almost four months after MTS relaunched, reports suggested the market was recovering quickly with around 4 million mobile subscribers by that stage. The government's suspension and generally poor handling of the dispute was seen as a serious indictment of its regulatory regime. Fixed-line penetration in Turkmenistan had been struggling to break through the 10% penetration barrier; it finally did so in 2010 and had reached 11% by 2012; Internet growth in the country had been hindered by severe government controls until 2007 when there was an apparent easing of restrictions; this has not, however, seen the expected lift in Turkmenistan's internet usage; strict controls remain in place. There were early signs of broadband internet access being made available in the country; but an estimated broadband penetration of less than 0.03% in 2012 made for a pessimistic outlook.
Turkmenistan key telecom parameters 2012 - 2013 Category | 2012 | 2013 (e) Fixed-line services: | | Total number of subscribers | 575,000 | 610,000 Fixed-line penetration | 11% | 12% Mobile services: | | Total number of subscribers | 4.0 million | 4.3 million Mobile penetration | 76% | 82% (Source: BuddeComm) This report provides an overview of the trends and developments in the telecommunications markets in Turkmenistan.
Subjects covered include:
Key statistics; Market and industry overviews; Major operators (mobile and fixed); Regulatory environment; Infrastructure; Mobile market; Internet market.