Kazakhstan - Telecoms, Mobile, Broadband & Forecasts

Kazakhstan has been experiencing a booming telecom market that included 95% mobile penetration by early 2009. This has come about on the back of a growing economy and a program positive regulatory reform in the telecom sector. Legislation adopted in 2004 laid the foundation for the liberalisation and development of the telecom sector and put an end to the monopoly enjoyed by the state-controlled telco, Kazakhtelecom.

The rapid and successful development of telecommunications in the country encouraged several foreign suppliers to establish a presence in this emerging market. Since 1992, international operators and manufacturers have been active in Kazakhstan in providing services and installing state-of-the-art equipment, especially as part of the country's international telecom network. Companies such as Motorola, Lucent, Siemens, Alcatel, Nokia, Daewoo and Nortel Networks have all been active in the market. Recognising the long-term potential of this market, many foreign telecom companies were looking to invest and form partnerships with local telecom companies.

By April 2005 four private operators had been licensed to provide international and long-distance services in competition with incumbent Kazakhtelecom. They were state-railway subsidiary TransTelecom, KazTransCom, a subsidiary of the national oil company, Ducat, and Astel. Up to 1,500 new telecom service operators had been licensed by end-2005.

The key drivers in the telecom sector included:

• Kazakhtelecom's deployment of a fully-digital national telecom network based on local and long-distance switches and fibre optic lines linking all major cities of the country;
• efforts to improve international connectivity and increase both mobile and fixed-line subscribers; the continuing digitalisation of exchanges;
• the further reform of telecommunications legislation;
• the process of accession to the World Trade Organization (WTO).

Kazakhstan had a relatively strong fixed-line penetration (22 telephone lines per 100 inhabitants by end-2008), with six operators providing fixed-line telephone services to about 3.5 million subscribers. There had been long waiting lists for fixed-line telephone services over the years. The country's mobile market entered a boom phase in 2000, no doubt boosted to some extent by the long delays in obtaining fixed-line services. The number of mobile services exceeded fixed-lines in October 2004. Demand for mobile services was so strong that in 2006 the government went on to auction a third GSM licence, which was awarded to NeoTelecom, a subsidiary of Kazakhtelecom. NeoTelecom then launched a mobile service in early 2007.

Key highlights:

• The year 2008 saw Kazakhstan's mobile market continue on its positive expansion path, with annual growth coming in at 36% for the year;
• With a 94% mobile penetration by March 2009, the country's mobile market was continuing to grow but was expected to start saturating in the not too distant future;
• Broadband Internet was finally starting to quickly expand on top of a general upturn in the Internet market; the number of broadband subscribers increased tenfold in 2006/07 and doubled again in 2008, with the number of subscribers likely to reach one million before end-2009;
• Kazakhstan, despite the considerable presence of incumbent Kazakhtelecom across the market, was benefiting from a diversified market that offered a energetic and competitive environment, especially in respect of the mobile market;
• On the economic front, after a six year period in which GDP had been growing at an annual rate in excess of 8%, 2008 saw a major slowdown in the Kazakhstan economy; 2009 was expected to see a significant contraction in growth.

This report provides an overview of the trends and developments in the telecommunications markets in Kazakhstan. Subjects covered include:

• Key Statistics;
• Market and Industry Overviews;
• Regulatory Environment;
• Infrastructure;
• Mobile Market;
• Internet Market, including Broadband.

A set of scenario forecasts for fixed-line, Internet and mobile segments.