Developing Telecoms | Azerbaijan’s telecoms market looking healthy

17 May 2012

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Azerbaijan’s telecoms market looking healthy

Friday, 19 November 2010 12:36 | James Barton

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Market research outlining Azerbaijan's telecommunications sector indicates that the country’s economic dynamism is driving growth.

Coming into 2010, Azerbaijan's mobile subscriber base was approaching 8 million (90% penetration), according to Research & Markets. Mobile subscriber growth had moderated to a still healthy 20% in 2009, down from almost 50% in 2008. Operator Azercell continues to command a major share of the market (around 60%), but this dominance was being slowly eroded.

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 fixed-line penetration of just under 16% by end-2009, and growth was continuing along a modest path in 2010.

In the meantime, the number of Internet users, having increased by 50% in 2009, had reached 3.7 million, while broadband subscriptions increased to 100,000 by end-2009, according to International Telecommunications Union figures; this was up from 15,000 just two years earlier.

On the back of a dynamic economy, Azerbaijan has been making healthy progress in the building of its telecommunications and information technology sectors. In has confronted 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 & Information Technologies.

A substantial platform for the ongoing development of Azerbaijan's telecom sector had been put in place by 2001. By that stage 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 Ministry of Communications & Information Technologies, 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 been the country's main telecom service provider, being directly controlled by the Ministry of Communications & Information Technologies. 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 been taking place in the context of a very strong developing economy. Azerbaijan has experienced rapid economic expansion in recent times, recording annual GDP growth levels of up to 30% a few years back. This has seen it rank as one of the fastest growing economies in the world. In fact, in Newsweek magazines ranking of low income economies by Economic Dynamism published in August 2010, saw Azerbaijan in second place, behind China and ahead of India.

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