IT sector of Azerbaijan (January-June 2011)

Analysis Materials 13 August 2011 15:40 (UTC +04:00)

The ICT sector in Azerbaijan is currently the fastest growing sector of the national economy. This is testified by the data provided by the State Statistics Committee of Azerbaijan, according to which the amount of information and communication services provided to organizations and people in Azerbaijan in the first half of 2011 totaled 562.2 million manat, or 14.4 percent more than last year. Of the total volume, 73.4 percent accounted for the services rendered to the population.


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According to the Minister of Communications and Information Technologies of Azerbaijan Ali Abbasov, the figures twice exceed the world average. Azerbaijan is the first country in the CIS, in which the public telephone network was converted into digital format, which is typical for developed countries and some developing countries. This, according to the minister, testifies that there are opportunities for access to broadband Internet throughout the country.

Internet market

According to Abbasov, the development of the Internet market, its rapid growth often creates difficulties in estimating the exact number of Internet users. But according to data provided by the World Economic Forum, the number of Internet users in Azerbaijan as of the end of 2013 will approximately be 50 percent. According to the ministry, now this figure only on users of broadband Internet reaches around 30 percent, which is 2.5 times higher than the average.

The volume of incoming Internet traffic in Azerbaijan increased by 29.8 million minutes in January-June compared to the same period of 2010 and amounted to 346.9 million minutes. According to the ministry, the volume of outgoing traffic hit 83.1 million minutes, increasing by 7.6 million minutes.

The number of international telephone channels also increased by 1,345 units and hit 9,265 units. The AZNET segment's throughput capacity also increased 2.7 times up to 40 Gbps.
According to the ministry, communication operators, legal and physical entities were provided with 10 three-digit prefixes to render reference and intelligent services for the first six months of the year. About 10,301 prefixes were allocated for the user's stationary communication network. About 11,000 prefixes were allocated to the communication operators to communicate wirelessly.

Over the past six months, in Azerbaijan the cost of lines leased from the primary internet service provider - Delta Telecom fell by half, which makes it possible to further reduce the cost of Internet services to users.

Today, Azerbaijan had the second global provider - Azertelecom, performing the delivery of traffic into the country. Now competition has appeared in this regard, which will further reduce the cost and improve the quality of Internet services.

In general, Aztelekom Production Unit plans to bring the level of broadband connections in its network up to 30 percent by the end of 2013.

Work in this direction has already started and is implemented in accordance with the operator's own strategy, which involves the installation of telecommunications equipment needed to increase the number of ports of broadband access.

Currently, broadband network of the operator covers all district centers, and by the end of the year, it will cover all major towns and cities. According to the strategy of Aztelekom, in 2012 the broadband network will cover the entire territory of the Republic.

According to statistics from the Ministry of Communications and Information Technology, Internet penetration rate in Azerbaijan is 50 percent, of which the share of broadband connections accounted for 15 percent. Adoption of the broadband Internet development strategy, preparation of which is completing will play a direct role in the expansion of broadband Internet.

Market of mobile communication

According to official statistics, about 62.7 percent of revenues accounted for mobile services, of which growth increased by 5.6 percent compared to the last year's indicators and totaled 352.6 million manat.

Over the last six months, the cost of mobile communication services in Azerbaijan decreased by 30 percent, and the cost of roaming services, depending on the direction, decreased from 20 to 50 percent. Today, the price range of mobile communication services in Azerbaijan is approximately at the level of Eastern European countries.

The subscriber base of mobile operators in Azerbaijan in the first half year increased by 518,965 people, reaching 9.629 million subscribers, according to the report of the Ministry of Communications and Information Technology, prepared for the first half year.

Azerbaijan in terms of mobile penetration is ahead of the world average of 35 percent.

The world average index of mobile penetration hits 78 percent.

According to the statistics of the ministry, 105 mobile phones fall to every 100 people in Azerbaijan. Mobile penetration in the regional countries is as follows: Georgia - 73.4 percent, Uzbekistan - 76.3 percent, Turkmenistan - 63.4 percent, Kyrgyzstan - 91.8 percent, Turkey - 84.9 percent, Iran - 91.3 percent. As of late 2010, mobile communication services were used by 9.1 million subscribers.

Number of mobile communication subscribers:


1 . 057 . 100


1 . 456 . 500


2 . 242 . 000


3 . 323 . 500


4 . 519 . 000


6 . 548 . 000


7 . 757 . 120


9 . 100 . 000

Level of the mobile penetration


12 .8


17 .4


26 .8


39 .0


52 .4


75 .0


86 .2



Today, there are three GSM operators in Azerbaijan. The number of active subscribers of Bakcell mobile communication company in Azerbaijan reached 2.5 million. The company's network operates 2,000 base stations, allowing to cover 98.7 percent of the Republic's territory, including remote regions. The network of Bakcell covers more than 95 percent of the population and 82 percent of the country's territory. In general, due to investments, the capacity of the network infrastructure of Bakcell was increased four times.

Azercell Company has been operating in the mobile services market since 1995, today the number of company's subscribers has reached 4.2 million people, of whom 300,000 joined the network of operator last year. At present Azercell's network covers 80 percent of the territory and 99.8 percent of the population of Azerbaijan.

The coverage area of ​​ the youngest mobile communication company in Azerbaijan, Azerfon, is 80 percent and the number of subscribers - 1.7 million.

IT - production

Azerbaijan produced computer, electronic, optical and electrical equipment worth 70.1 million manat in the first six months of this year.

The growth was recorded in the production of electrical equipment, including power transformers and TV sets.

As of July 1, finished goods worth 8.4 million manat were in the warehouse, which made up 3.5 percent of the total reserves of industrial products.

The volume of production of computer keyboards declined by 63.8 percent compared to the six months of 2010.

Revenues and investments of IT sector

During the first six months, the production units and enterprises owned by the Ministry of Communications and Information Technologies of Azerbaijan received revenues worth $155.2 million manat (under forecasted 136.5 million manat), 18.3 percent more than the same period of the last year, according to the report of the Ministry of Communications in the first half year.

In January-June, the production units and enterprises of the Ministry transferred to the state budget AZN 17.4 million, to the State Fund of Social Protection - seven million manat.

In total, during the first half year, the amount of revenues in the sector of information and communication technologies and postal services in Azerbaijan totaled 591.8 million manat, which is 15.8 percent more than the same period of the last year.

About 76.2 percent of revenues in the ICT sector and postal services accounted for non-state communication enterprises.

During the reported period, the ministry invested 95.8 million manat in the ICT sector and postal communications, which is two times more than the figures of the last year.

The investments made by the ministry's units and enterprises totaled 61.4 million manat.


In the first half year, the growth for the sector of information and communication technologies in Azerbaijan amounted to 15.8 percent, the telecommunications sector - 10.6 percent, IT-sector - two timea. This trend will last in Azerbaijan for about 6-7 years.

The revenue of the ICT sector and postal services in Azerbaijan's GDP over the past six months was 1.8 percent. The non-oil sector GDP in the first half year totaled 10.8 billion manat, and the real growth rate - 7.2 percent. Amount of income on the ICT sector and postal services in non-oil sector GDP in the first six months amounted to 3.8 percent.