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Uzbekistan - Telecoms, Mobile, Broadband and Forecasts

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Action by Uzbekistan against MTS subsidiary reinforces country’s reputation as being hostile to foreign investors

For a long time Uzbekistan’s telecom infrastructure remained outmoded and inadequate. The country has been struggling to bring its telecommunications system up to the standard found in developed markets. Nevertheless, over the last decade or so, the situation has been gradually improving. This has in part been due to the government’s decision to give national priority to Information and Communications Technologies. Consequently there has been an upward trend in the country’s telecom market, with increased investment in infrastructure, expanding subscriber bases and rising revenues. The government’s strategic policy was to privatise the incumbent operator Uzbektelecom and to open the market to competition in accordance with the country’s aim to join the World Trade Organization (WTO).

The telecom sector has been regulated by the Uzbek Agency for Communications and Information (UzACI) since the creation of the agency in 2002/2003. In 2005 the UzACI approved a telecommunications investment program for the period 2005-2010. Among other things, the program aimed to increase the total number of fixed lines to 2.2 million and achieve 100% digitalisation of the network by 2010. The fixed line subscriber target was not achieved with subscriber numbers still languishing below 1.9 million. And only about two-thirds of the network was digital by 2007, but by March 2009 this has been lifted sharply to 89%, according to the Uzbek Agency for Communications and Information, and effectively achieved the target by end-2010. In the meantime fixed teledensity was stuck on around 7%. The five year telecom investment program also aimed at accomplishing marked improvements in mobile telephone and internet penetration. By 2011 both these segments of the market had shown significantly gains, with the mobile market in particular having expanded rapidly over the five years. Subscriber numbers had jumped from around one million to 21 million over the plan period. Funding for the investment program was provided by loans and foreign investment, the internal resources of operators and providers, as well as from government funding.

The state-owned national telecom operator, Uzbektelecom, has been responsible for the fixed-line network and services throughout the country. It was originally granted a monopoly on international voice services and VoIP until 2007. In the meantime, it controlled around 98% of local fixed-line telephony services and 96% of international fixed-line services. Little progress had been made in the government’s plans to privatise Uzbektelecom despite several attempts over the last decade to sell off a sizable stake to a foreign investor. The alternative fixed-line providers were Buzton and East Telecom, but they were servicing only a limited numbers of subscribers.

Mobile telephony first arrived in Uzbekistan in 1992; by 2003 there were seven mobile networks offering a range of technologies and standards. All of the mobile operators were majority owned by foreign investors. One operator, Uzmacom, ceased business in 2005. Some further consolidation in the mobile market took place in 2006 when Buztel was absorbed into the Vimpelcom-owned Unitel; it seemed highly likely that further consolidation would occur in the not too distant future.

While the country’s internet market had enjoyed considerable growth since 2002, actual internet subscriptions have remained limited for the majority of the country’s population. Fixed broadband subscriptions in particular were small in number. By 2005 internet user penetration stood at just over 4%; by early 2012 it had reportedly jumped to 30%. (It is noted that the various sources for statistics on internet subscribers in Uzbekistan provide limited or contradictory information.)

In 2012 a dramatic turn of events saw the government take strong action against mobile operator MTS Uzbekistan after alleging a range of violations, including tax evasion, failure to meet regulatory standards, and the use of unlicensed infrastructure. The conflict escalated dramatically in August 2012 with the cancellation of MTS Uzbekistan’s operating licence. Then, in September, the company’s assets were seized. This effectively resulted in its nationalisation. Industry reaction to the series of events was one of serious concern and the process was certain to be viewed negatively by potential foreign investors.

Major highlights:

By early 2012 mobile penetration in Uzbekistan had moved past 90%, with mobile subscriber numbers having increased to over 25 million;

After the country’s mobile subscriber base grew by more than 100% in 2008, annual expansion has eased to around between 20%-30%;

Actual growth in 2011 was 22% and a similar figure was likely for 2012;

Fixed-line growth in Uzbekistan has been almost non-existent in recent times;

With slightly less than two million fixed subscribers, fixed penetration continued to sit at just 7%;

On the positive front, however, has been the accelerated conversion of the fixed network from analogue to digital with the 100% target having been effectively achieved;

On the basis of published statistics, recent growth in internet usage has been considerable and user penetration had reportedly reached 30% coming into 2012;

There was an ongoing surge in the growth of broadband internet subscriptions, but from a very small subscriber base;

Fixed broadband subscriber penetration was still below 1% in 2012;

The government of Uzbekistan has continued to keep a tight control over some aspects of internet usage and has come under some international criticism for its repressive policies in this regard;

The government both directly and through the telecom regulator commenced vigorous action against mobile operator MTS Uzbekistan in 2012 after alleging a range of violations, including tax evasion, failure to meet regulatory standards, and the use of unlicensed infrastructure;

The conflict escalated dramatically in August 2012 with the cancellation of MTS Uzbekistan’s operating licence; in September MTS assets were seized effectively nationalising the company.

Uzbekistan - key telecom parameters – 2011 - 2012
Category | 2011 | 2012 (e)
Fixed-line services: | |
Total No. of subscribers | 1.93 million | 1.96 million
Internet services: | |
Total No. of subscribers | 350,000 | 390,000
Mobile services: | |
Total No. of subscribers | 25.4 million | 30.0 million
(Source: BuddeComm)
This report provides an overview of the trends and developments in the telecommunications markets in Uzbekistan.

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.

1. Executive summary
2. Key statistics
3. Country overview
3.1 Background
3.2 Economy
4. Telecommunications market
4.1 Overview of Uzbekistan’s telecom market
5. Regulatory environment
5.1 Overview
5.2 Regulatory developments
6. Fixed network operators in Uzbekistan
6.1 Uzbektelecom
6.1.1 Privatisation of Uzbektelecom
6.2 Buzton
6.3 East Telecom
7. Telecommunications infrastructure
7.1 National telecom network
7.2 Forecasts – fixed-line market – 2015; 2020
7.2.1 Fibre optic cables
7.3 Satellite communications
8. Internet market
8.1 Overview
8.2 Internet statistics
8.3 Forecasts – internet services – 2015; 2020
8.4 ISP market
8.4.1 Overview
8.4.2 Unitel
9. Broadband market
9.1 Overview
9.1.1 Broadband statistics
9.2 WiMAX
10. Mobile communications
10.1 Overview of Uzbekistan’s mobile market
10.1.1 Mobile statistics
10.2 Forecasts – mobile market – 2015; 2020
10.3 Mobile data
10.3.1 Long Term Evolution (LTE) / Fourth Generation (4G)
10.4 Major mobile operators
10.4.1 MTS-Uzbekistan (formerly Uzdunrobita)
10.4.2 Unitel
10.4.3 UCell (Coscom)
10.4.4 Uzbektelecom Mobile (UzMobile)
10.4.5 Other mobile operators
11. Notes on forecasting
12. Related reports
List of Tables and Charts
Table 1 – Country statistics Uzbekistan – 2012
Table 2 – Telephone network statistics – 2011
Table 3 – Internet user statistics – 2011
Table 4 – Mobile statistics – 2011
Table 5 – National telecommunications authority
Table 6 – Uzbekistan’s GDP real growth rate – 2006 - 2013
Table 7 – Fixed lines in service, annual growth and teledensity – 1991 - 2012
Table 8 – Forecast fixed-line subscribers and penetration rates – 2015; 2020
Table 9 – Internet users and penetration – 1999 - 2012
Table 10 – Internet subscribers – 1999 - 2012
Table 11 – International internet bandwidth – 2001 - 2012
Table 12 – Proportion of households with a computer – 2002 - 2011
Table 13 – Forecast internet subscribers – 2015; 2020
Table 14 – Unitel fixed broadband subscribers – 2011 – 2012
Table 15 – Unitel’s fixed broadband ARPU – 2011 - 2012
Table 16 – Fixed broadband subscribers – 2003 - 2012
Table 17 – Fixed broadband subscribers and household overview – 2011
Table 18 – DSL broadband subscribers – 2003 - 2011
Table 19 – Mobile subscribers, annual change and penetration rate – 1995 - 2012
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 and penetration rates – 2015; 2020
Table 23 – MTS (Uzdunrobita) mobile subscribers – 1998 – 2012
Table 24 – Unitel mobile subscribers – 1998 - 2012
Table 25 – Unitel’s mobile ARPU – 2006 - 2012
Table 26 – UCell (Coscom) mobile subscribers – 2007 – 2011
Chart 1 - Fixed lines in service, annual growth and teledensity – 2001 - 2012
Chart 2 – Mobile subscribers and penetration rate – 2005 - 2012

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