Central Asia Telecommunications Report Q3 2009

BMI's Central Asia Telecommunications Report for Q309 covers Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan, with five-year forecasts for the mobile and fixed-line sectors, as well as market data analysis sections for the mobile, fixed-line and internet markets.

This quarter sees revisions to our Uzbekistan and Kazakhstan fixed-line forecasts, down for the former and up for the latter. Uzbekistan is forecast to have the slowest fixed-line growth rate of the five countries we cover, averaging less than 2% per year over the next five years. We believe that Tajikistan's fixed-line penetration overtook that of Uzbekistan in 2008, leaving Uzbekistan with the lowest fixed-line penetration in the region. Although incumbent Uzbektelecom and a host of alternative operators are expanding their fixed-line network coverage and experiencing some subscriber growth, we do not anticipate rapid take-up. Fixed-line growth in 2008 was stronger than we had expected in Kazakhstan, with penetration rising to 23%, more than double Turkmenistan's 9.5%.

Each of the countries' fixed-line sectors is dominated by an incumbent, making fixed-line development heavily dependent on these operators. Competition in the countries varies, but even in the more developed ones like Kazakhstan, most of the competitors are focused on the internet sector rather than fixed-line.

With mobile penetration dramatically increasing in each country, fixed-to-mobile substitution will impact fixed-line growth more and more in the coming years.

The internet sectors in Central Asia are seriously underdeveloped, with internet usage and broadband subscriptions being extremely low across the region. That said, the markets do appear to be developing.

Kazakhstan and Uzbekistan in particular are progressing quickly, seeing the launch of advanced services such as IPTV and witnessing growing competition from alternative operators, such as East Telecom and Arna, illustrating the technological development in some small areas in the region. Given the underdeveloped nature of the countries' wireline infrastructure, alternative technologies such as WiMAX and satellite-based broadband offer huge potential in the voice and broadband markets.

Major international players such as Russia's VimpelCom and South Korea's KT Corporation already have a presence in the fixed-line and internet sectors, and the chance to acquire one of the national incumbents will be too big an opportunity to pass up. The privatisations of Kazakhtelecom, Tajiktelecom, Kyrgyztelecom and Uzbektelecom are all on the cards, and a good deal of interest is being shown. The potential of the broadband sector in Central Asia, coupled with a presence in highgrowth mobile markets, makes the incumbents extremely attractive acquisition targets.

• Executive Summary
• SWOT Analysis
• Central Asia Telecommunications SWOT
• Business Environment
• Central Asia
  • Table: Central Asia Business Environment Ratings
• Industry Forecast Scenario
• Mobile
  • Table: Central Asia ??