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Armenian Telecom Market with Mobile broadband penetration of over 30 pc: Ken Research
Highlights
By 2015,the Armenian telecom market represented another developing market that is very busy trying to put an effective national telecommunications service in place. With its relatively small population and a GDP per capita of around US$2,800 in 2015, it does not offer a hugely lucrative market opportunity.
By 2015,the Armenian telecom market represented another developing market that is very busy trying to put an effective national telecommunications service in place. With its relatively small population and a GDP per capita of around US$2,800 in 2015, it does not offer a hugely lucrative market opportunity.
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However, the government and the operators have been systematically building telecom networks and offering services.
At the end of 2014 the mobile penetration was 116% and the mobile subscriber market was continuing to grow, the annual growth rate being at close to 10% at the time. On the back of the mobile networks an effective mobile broadband offering has quickly sprung up.
Coming into 2015 the number of mobile broadband subscribers had passed one million, representing about one third of the total mobile subscriber base at the time. In the meantime, the fixed-line market had been shrinking or at least levelling off at around a relatively high 19% penetration. At the same time, fixed broadband provided a solid base for internet access with 9% penetration; this was underpinning a reasonably high household internet penetration of 46% by end-2014.
The local telecom market has had its difficult times. After a run of strong growth in mobile subscribers in particular, the market in Armenia experienced a major slowdown triggered by the Global Financial Crisis (GFC) in 2009. Demand for telecom services in Armenia plummeted as the most damaging impact of the GFC hit the country in that year. Mobile subscriber growth was negligible (around 2%). There has been some strong overall recovery since then, although growth has been somewhat erratic. In five years mobile penetration jumped from 80% to 120%.
The telecommunications sector in Armenia has certainly been experiencing a rollercoaster ride over the last two decades. The sector slipped into decline following the collapse of the former Soviet Union back 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 initially slow to respond.
Eventually the telecom market started to undergo a transformation. In the opening up of the mobile market, the government made a controversial decision in choosing a 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. The Public Services Regulatory Commission (PSRC), the country’s telecom regulator, awarded a third mobile licence - to Orange Armenia. The newly licensed operator, 100% owned by France Telecom (Orange), launched a mobile service in 2009. Ucom, a fixed-line and internet service provider, was granted the country’s fourth mobile licence by the PSRC in 2013.
The launch of 3G services by both ArmenTel and K-Telecom in 2008 and then Orange Armenia in 2009 gave the mobile sector a major lift; new generation services have since formed the basis of a much healthier market with stronger ARPU being reported by the operators.
An important, and indeed very positive, regulatory development in the mobile market has been the launch of Mobile Number Portability in 2013/2014, with good cooperation by the operators a feature of its introduction.
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