Kazkahstan and Central Asia Telecommunications Report Q2 2012

The Q212 update to BMI’s report on telecoms markets of Kazakhstan and its four Central Asian neighbours incorporates new mobile subscriber data for the three months ending December 31 2011. Using this data, we have made upward revisions to our five-year growth forecasts for the development of several of the region’s mobile markets based on stronger than expected growth in Q411. Looking ahead, the region’s mobile markets will continue to see growth, however, we expect additions to slow in the latter part of the forecast period as a number of the region’s markets see a slowdown as mobile markets reach maturity.

Looking at our broadband subscriber forecasts for the region include customers who use devices such as netbooks and USB sticks to connect to the internet wirelessly through a high-speed (3G) network; however, we do not include smartphones, only dedicated mobile data subscriptions. Meanwhile, of all the region’s markets, Kazakhstan has the most sophisticated fixed broadband sector. A number of operators are investing in the development of optical fibre (FTTx) services and are forging ahead with plans to introduce advanced IP services such as IPTV.

Key regional developments within the past three months include the conclusion of the first phase of the agreement for Nordic operator TeliaSonera to increase its stake in K-Cell, Kazakhstan’s largest mobile operator by subscribers. In February 2012, TeliaSonera announced the completion of the first phase of the transaction, acquiring 49% from Kazakh fixed-line operator Kazakhtelecom for US$1.52bn. It reiterated its position that it would sell 25% minus one share in an IPO before the end of 2012. K-Cell is a joint venture (JV) between Fintur Holdings (with a 51% stake) and Kazakhtelecom (with 49%). Meanwhile, Fintur Holdings is owned by TeliaSonera (58.55%) and Turkey’s Turkcell (with a 41.45% interest). As detailed in the earlier MoU, Kazakhtelecom will list all of its shares in the aforementioned IPO, apart from a 24% plus one share, which will be acquired by TeliaSonera directly.

Another notable regional development was the news that from January 1 2012 the Government of Uzbekistan introduced a fee for mobile operators charged on a per subscriber basis. The presidential resolution requires operators to pay UZK400 (US$0.24) a subscriber each month. Although insubstantial in dollar terms, BMI calculates it to correspond to a little under 5% of market average monthly ARPU. The fee may contribute to price rises already announced for January 2012 by the country’s three largest operators – MTS, UCell and Beeline. A total of 90% of the received funds will go to the state budget of Uzbekistan, while the remaining 10% will go the regulator. We await operator results from Q112 to determine what impact this has had on the ongoing development of the Uzbekistan mobile market.
At the time of writing, Turkmenistan’s largest mobile operator, MTS Turkmenistan, continues to be offline, with no data reported for the operator. In March 2012, it was announced that MTS failed to reach an agreement for the resumption of telecoms services, according to reports in the Russian press. However MTS will continue legal proceedings as well as following active negotiations with the Turkmen government, according to Oleg Raspopov, the vice-president of MTS. The operator reportedly considers the prospects of service resumption to be low.

Evidence points to the fact that the government does not plan to allow another operator, at least in the short term. The Turkmenistan Ministry of Communications was reported to be concluding contracts with Huawei, Nokia Siemens Networks (NSN) and Russian OSS vendor Eastern Wind. Huawei and NSN are reportedly in line to supply network equipment while Eastern Wind will provide technical support and expand the billing system, as well as preparing it for the introduction of VAS. At the same time, reports stated that Altyn Asyr was set to be privatised, although with no date set, this development is subject to considerable uncertainty.

We maintain our view that faced with the closure of MTS’ network, the majority of Turkmenistan’s mobile subscribers have had to seek SIM cards provided by the country’s sole remaining operator Altyn Asyr. The latter, which operates in the country under the TM-Cell brand, is now the de-facto monopoly mobile voice provider in Turkmenistan. However, there have also been reports of SIM card shortages and insufficient network capacity, as the monopoly stymies market development.

Kazakhstan and Central Asia Telecommunications Q2 2012

Published : May 2012                   No. of Pages : 112                     Price:US$1175

Table of Content

Executive Summary . 5
SWOT Analysis . 7
Central Asia Telecommunications SWOT .. 7
Business Environment 8
Central Asia 8
Table: Central Asia Risk/Reward Ratings, Q212 . 13
Industry Forecast Scenario … 14
Mobile … 14
Table: Central Asia – Mobile Sector – Historical Data & Forecasts, 2009-2016 14
Kazakhstan .. 15
Kyrgyzstan … 16
Tajikistan . 17
Turkmenistan … 18
Uzbekistan … 19
Fixed Line . 20
Table: Central Asia – Fixed Line Sector – Historical Data & Forecasts, 2009-2016 .. 20
Broadband 23
Table: Central Asia – Broadband Sector – Historical Data & Forecasts, 2009-2016 . 23
Market Data Analysis . 27
Mobile … 27
Kazakhstan .. 27
Table: Kazakhstan Mobile Market, September 2011 28
Kyrgyzstan … 33
Table: Kyrgyzstan Mobile Market, December 2011 . 36
Tajikistan . 39
Table: Tajikistan Mobile Market, December 2011… 41
Turkmenistan … 44
Table: Turkmenistan Mobile Market, December 2010 . 46
Uzbekistan … 50
Table: Uzbekistan Mobile Market, December 2011 . 51
Fixed Line . 57
Kazakhstan .. 57
Kyrgyzstan … 58
Tajikistan . 60
Turkmenistan … 60
Uzbekistan … 61
Internet . 62
Kazakhstan .. 62
Kyrgyzstan … 65
Tajikistan . 67
Turkmenistan … 68
Uzbekistan … 69
Regulatory Environment & Industry Developments … 73
Kazakhstan .. 73
Kazakhstan: Regulatory Bodies And Their Responsibilities. 75
Kyrgyzstan … 76
Kyrgyzstan: Regulatory Bodies And their Responsibilities .. 77
Tajikistan . 77
Tajikistan: Regulatory Bodies And Their Responsibilities … 79
Turkmenistan … 80
Turkmenistan: Regulatory Bodies And Their Responsibilities . 81
Uzbekistan … 82
Uzbekistan: Regulatory Bodies And Their Responsibilities . 84
Competitive Landscape . 86
Key Players … 86
Table: Key Players – Central Asia Telecoms Sector 86
Company Monitor … 87
Central And Eastern Europe Risk/Reward Ratings, Q212 … 90
Operator Profiles 91
Kazakhtelecom . 91
Kyrgyztelecom . 96
Uzbektelecom ..100
Tajiktelecom103
Regional Telecommunications Penetration Overview . 105
Fixed Line 105
Table: Regional Fixed-Line Penetration Overview .105
Mobile .105
Table: Regional Mobile Penetration Overview …105
Glossary Of Terms … 106
Table: Glossary Of Terms …106
BMI Methodology . 107
How We Generate Our Industry Forecasts ..107
Table: Key Indicators For Telecommunications Industry Forecasts …107
Telecoms Business Environment Ratings .109
Risk/Reward Ratings Methodology .109
Table: Ratings Indicators …110
Weighting 111
Table: Weighting Of Indicators ..111
Sources …111Table: Central Asia Risk/Reward Ratings, Q212 . 13

Table: Central Asia – Mobile Sector – Historical Data & Forecasts, 2009-2016. 14

Table: Central Asia – Fixed Line Sector – Historical Data & Forecasts, 2009-2016 . 20

Table: Central Asia – Broadband Sector – Historical Data & Forecasts, 2009-2016 . 23

Table: Kazakhstan Mobile Market, September 2011. 28

Table: Kyrgyzstan Mobile Market, December 2011 . 36

Table: Tajikistan Mobile Market, December 2011. 41

Table: Turkmenistan Mobile Market, December 2010 . 46

Table: Uzbekistan Mobile Market, December 2011 . 51

Table: Key Players – Central Asia Telecoms Sector . 86

Table: Regional Fixed-Line Penetration Overview .105

Table: Regional Mobile Penetration Overview .105

Table: Glossary Of Terms .106

Table: Key Indicators For Telecommunications Industry Forecasts .107

Table: Ratings Indicators .110

Table: Weighting Of Indicators .111