The Azerbaijani economy has a major dependence on oil resources and the ICT industry. The COVID-19 pandemic and oil price slump is expected to result in an economic contraction of 2.2% in 2020, and slow recovery afterwards. The telecom sector is also exposed to the risk of delays in infrastructure and the launching of services based on new technologies, including 5G.
The mobile market is concentrated, with Azercell, Bakcell, and Azerfon together accounting for around 95% of the market. Azercell has trialled 5G, though other MNOs plan to defer 5G until there is greater market demand, instead opting to focus on the extensive reach of LTE to carry increasing data traffic.
The mobile sector has seen considerable development in network expansion, though growth in the number of subscribers has been inconsistent in recent years, partly in line with the economic vagaries. The subscriber base fell in 2016 and 2017, and though it has recovered since the pace of growth is expected to be slower in 2020 in the wake of the COVId-19 pandemic. Growth during the next five years will be bolstered by the emergence of 5G though it is expected to be progressively slower as the market matures and the penetration rate rises.
In line with development in the mobile market, the number of mobile broadband subscribers has grown rapidly over the past five years, supported by widespread rollouts of LTE infrastructure and the promotion of an attractive range of packages by the MNOs. Moderate growth is predicted over the next five years, driven by increasingly faster speeds and, from about 2022, from emerging 5G networks.
Fixed-line broadband market penetration has grown slightly over the last five years. Over the next five years growth is expected to continue to follow the same trend.
The publisher notes that the outbreak of the Coronavirus in 2020 is having a significant impact on production and supply chains globally. During the coming year the telecoms sector to various degrees is likely to experience a downturn in mobile device production, while it may also be difficult for network operators to manage workflows when maintaining and upgrading existing infrastructure. Overall progress towards 5G may be postponed or slowed down in some countries.
On the consumer side, spending on telecoms services and devices is under pressure from the financial effect of large-scale job losses and the consequent restriction on disposable incomes. However, the crucial nature of telecom services, both for general communication as well as a tool for home-working, will offset such pressures. In many markets the net effect should be a steady though reduced increased in subscriber growth.
Although it is challenging to predict and interpret the long-term impacts of the crisis as it develops, these have been acknowledged in the industry forecasts contained in this report.
The report also covers the responses of the telecom operators as well as government agencies and regulators as they react to the crisis to ensure that citizens can continue to make optimum use of telecom services. This can be reflected in subsidy schemes and the promotion of tele-health and tele-education, among other solutions.
- Azerbaijan ranked 13th of 34 Asian markets, with a Telecoms Maturity Index score of 45.6.
- Azercell partners with Ericsson to deploy 5G projects, trials, and use cases;
The report update includes operator data to Q1 2020, Telecom maturity Index charts and analyses, assessment of the global impact of COVID-19 on the telecoms sector, recent market developments.
Companies mentioned in this report:
Aztelekom, AzQtel (SAZZ), AzEuroTel, Azercell, Bakcell, Azerfon, Catel, BakTelekom (BTRIB), Eurasiacom, Fintur Holdings, VEON (Beeline).
2 Regional Market Comparison
3 Country overview
4 COVID-19 and its impact on the telecom sector
4.1 Economic considerations and responses
4.2 Mobile devices
5 Telecommunications market
5.1 Market overview and analysis
6 Regulatory environment
6.1 Ministry of Transport, Communications and High Technology
6.2 Mobile Number Portability (MNP)
6.3 Fixed Number Portability (FNP)
7 Mobile market
7.1 Mobile statistics
7.2 Mobile technologies
7.3 Major mobile operators
8 Fixed-line broadband market
8.1 Fixed broadband statistics
9 Digital economy
10 Fixed network operators
10.4 BakTelekom (BTRIB)
11 Telecommunications infrastructure
11.1 Overview of the national telecom network
11.2 Next Generation Network (NGN)
11.3 Optical fibre network
11.4 National Broadband Network
11.5 International infrastructure
12 Appendix Historic data
13 Glossary of abbreviations
14 Related reports
List of Tables
Table 1 Top Level Country Statistics and Telco Authorities Azerbaijan 2020 (e)
Table 2 Growth in the number of mobile subscribers and penetration 2010 - 2025
Table 3 Growth in the number of mobile broadband subscribers and penetration 2010 2025
Table 4 Mobile operators and systems
Table 5 Mobile operators Subscribers and market share 2018
Table 6 Growth in the number of Azercell's LTE base stations 2015; 2017 2019
Table 7 Change in the number of Azercell's mobile subscribers 2010 2019
Table 8 Development of Azercell's financial data 2010 2019
Table 9 Change in the number of Bakcell's mobile subscribers 2010 2019
Table 10 Change in the number of Bakcell's 3G and LTE subscribers 2016 2018
Table 11 Increase in the number of Bakcell's mobile base stations 2016 2019
Table 12 Change in the number of Azerfon's mobile subscribers 2010 2020
Table 13 Growth in the number of fixed broadband subscribers and penetration 2010 - 2025
Table 14 Development of Aztelecom's financial data 2016 - 2019
Table 15 Development of Baktelecom's financial data 2015 - 2019
Table 16 Decline in the number of fixed lines and penetration 2010 2025
Table 17 Increase in international internet bandwidth 2009 2019
Table 18 Historic - Fixed lines in service, annual growth and penetration 1995 2006
Table 19 Historic - Azercell mobile subscribers 2003 2009
Table 20 Historic - DSL broadband subscribers 2005 2015
Table 21 Historic- Internet users and penetration 1995 2006
Table 22 Historic - Mobile subscribers, annual growth and penetration 1994 2006
Table 23 Historic - Bakcell mobile subscribers 2002; 2005 2006
Table 24 Historic - Internet Users and Penetration 2007 2017
Table 25 Historic - Internet bandwidth capacity 2001 2009
Table 26 Historic - Azerfon mobile subscribers 2007 2009
List of Charts
Chart 1 Asian Telecoms Maturity Index by Market Category
Chart 2 Asian Telecoms Maturity Index vs GDP per capita
Chart 3 Telecoms Maturity Index Central Asia
Chart 4 Growth in the number of mobile subscribers and penetration 2010 - 2025
Chart 5 Growth in the number of mobile broadband subscribers and penetration 2010 2025
Chart 6 Change in the number of Azercell's mobile subscribers 2010 2019
Chart 7 Development of Azercell's financial data (AZN million) 2010 2019
Chart 8 Development of Azercell's financial data (AZN million) 2010 2019
Chart 9 Change in the number of Bakcell's 3G and LTE subscribers (thousand) 2016 2018
Chart 10 Increase in the number of Bakcell's mobile base stations 2016 2019
Chart 11 Growth in the number of fixed broadband subscribers and penetration 2010 2025
Chart 12 Development of Aztelecom's financial data (AZN million) 2016 - 2019
Chart 13 Development of Baktelecom's financial data (AZN million) 2015 - 2019
Chart 14 Decline in the number of fixed lines and penetration 2010 2025
Chart 15 Increase in international internet bandwidth 2009 2019
List of Exhibits
Exhibit 1 Key Market Characteristics by Market Segment
Exhibit 2 Central Asia -Key Characteristics of Telecoms Markets by Country
In the meantime, the number of internet users in the country had passed the 6 million mark by early 2016 with an internet user penetration of about 63%. Fixed broadband subscriptions had increased from just 100,000 in 2009 to more than two million and strong growth was continuing. Mobile broadband had rocketed from just 19,000 in 2009 to 6.4 million by end-2015. Into 2016, the number of mobile broadband subscribers was growing at an annual rate of around 15%.
The government has announced that the country’s second telecommunications satellite, Azerspace-2, was to be launched by 2018. Earlier, Azerbaijan had put its first telecommunications satellite into orbit. The Azerspace-1 satellite was providing communications coverage for Azerbaijan, Central Asia, Europe and Africa with a mission life of 15 years. Its service offerings included digital broadcasting, internet access and data transmission, among others.
The expansion of the country’s telecom sector has taken place in the context of a very strong developing economy. Azerbaijan has seen rapid economic expansion, recording annual GDP growth levels of up to 30% a few years back. However, the economy suffered a major setback following the Global Financial Crisis (GFC). The poor state of the global economy saw a big drop in Azerbaijan’s oil and gas exports; real GDP grew by just 0.1% in 2011. Since then there have been signs of a patchy recovery as the country adjusted to the global realities. The anticipated slower expansion in oil production was acting as a considerable drag on the country’s GDP growth. Growth has been fluctuating. In 2015 was forecast by the IMF at less than 1%, but came in at 4%.
Apart from the economy the other major issue hanging over the telecom sector involves the corrupt business practices that prevail in the local industry. Companies linked to the family of the President Aliyev have been playing a significant role in telecoms that has been cause for concern. Transparency International’s Corruption Perceptions Index (2015) for Azerbaijan was 29 out of 100 ranking it 119 out of 168 countries rated.