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Armenia - Telecoms, Mobile and Internet
Paul Budde Communication Pty Ltd., April 2012, Pages: 32
Executive summary
Armenia’s broadband internet market is finally ‘on the move.’
Note: As part of an annual update of this report new statistics to December 2011 have been included where available and supplemented by estimates in the absence of published figures where appropriate.
Demand for telecom services in Armenia plummeted as the most damaging impact of the Global Financial Crisis hit the country in 2009. Mobile subscriber growth was negligible (around 2%) for the year. Since then there has been some recovery in both the economy and the country’s telecom market. Through 2011 and into 2012, an improving national economy saw a recovery in the mobile market, with annual growth returning to ‘double digit’ levels.
The telecommunications sector in Armenia has experienced a rollercoaster ride over the last two decades. The sector slipped into decline following the collapse of the former Soviet Union in the 1990s, with the fixed-line teledensity falling markedly. This was partly as a consequence of the prevailing socio-economic instability within the region, but more significant a factor was that the country initially failed to embrace any vigorous reform in the telecom sector. Despite steadily improving economic conditions as the country underwent economic reform, the telecoms sector was slow to respond.
In the last few years – and despite the global financial problems - more positive signs have been evident, however; whilst these positive signs have not translated into any fixed-line growth, with that segment of the market continuing to be flat, much more encouraging has been the mobile segment, with subscriber numbers having increased almost fivefold since 2006. The growth in mobiles was considerably boosted by the introduction of competition into the market in 2005. As already noted, expansion in the mobile market slowed dramatically in 2009 as the faltering Armenian economy started to have a serious negative effect on the local telecom market. This raised major questions about how the market would perform in the short to medium term. But by 2011 it was clear that the market had bounced back on was on a steady growth path again.
Armenia’s path to a more competitive market has been slow. This had a lot to do with ArmenTel, the country’s national telecom provider, which had been granted the exclusive right to provide all telecommunications services in Armenia, including public switched telephony services and mobile telephony, until 2013. As a consequence of this monopoly, no other company was able to provide international satellite services either. The one segment of the market initially exempt from this monopoly was internet services.
In 2004 the government reached a compromise agreement with ArmenTel to end its exclusive rights to provide a range of services, including GSM mobile, satellite and mobile radio communications services in exchange for various other concessions, including the stipulation that only one alternative mobile operator would be allowed in Armenia until 2009. ArmenTel was to also retain sole rights to internet telephony and the use of fibre optic cables.
The government subsequently made a controversial decision to choose Armenia’s second mobile operator without transparent and competitive bidding; Karabakh Telecom (K-Telecom), a little-known Lebanese-owned company, was officially awarded a licence to operate a GSM network in Armenia. K-Telecom launched its VivaCell service in 2005. Russian telco Mobile TeleSystems (MTS) purchased an 80% stake in K-Telecom in 2007.
The Public Services Regulatory Commission (PSRC), the country’s telecom regulator, awarded a third mobile licence - to Orange Armenia. The newly licensed operator was 100% owned by France Telecom (Orange). It launched a mobile service in 2009.
Note: Absence of a complete set of reliable official statistics means that where necessary estimates have been included.
Key highlights:
The mobile market in Armenia was on a positive growth path through 2011 and into 2012, having recovered from the serious setback the sector experienced in 2009;
After growth in the country’s mobile market fell to just 2% in 2009, it rebounded well to grow by 45% over the 2010/2012 period;
Coming into 2012 mobile penetration in Armenia had reached 115%;
This meant that there were around 3.8 million mobile subscribers in the country by January 2012;
New player Orange Armenia was competing vigorously in the market place by 2011;
ArmenTel had launched a 3G service in 2008, but take up remained modest;
Fixed-line growth in Armenia was sluggish, actually going negative in 2011;
After years of slow progress in digitalising the national network, ArmenTel finally completed the program, effectively achieving 100% national digitalisation in 2011;
Growing internet awareness in the country saw a surge in internet users over the 2010/2011 period with user penetration estimated to be at around 42% coming into 2012;
As internet take up accelerated, broadband suddenly boomed, with fixed broadband penetration reaching 5% and an estimated 15% of household had fixed connections by end-2011;
The government announced plans in 2011 to roll out a National Broadband Network in a project being implemented jointly with the World Bank.
Armenia – Key telecom parameters – 2011 - 2012
Category2011 (e)2012 (e)
Fixed-line services:
Total number of subscribers575,000570,000
Annual growth-2%0%
Fixed-line penetration (population)18%17%
Internet:
Total number of subscribers160,000230,000
Annual growth28%43%
Internet subscriber penetration (population)5%7%
Mobile services:
Total number of subscribers (million)3.804.20
Annual growth15%10%
Mobile penetration (population)115%127%
(Source: BuddeComm)
This report provides an overview of the trends and developments in the telecommunications markets in Armenia.
Subjects covered include:
Market and industry overviews;
Major operators (mobile and fixed)
Regulatory environment;
Infrastructure;
Mobile market;
Internet market, including broadband;
Broadband services, including fixed and mobile.
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