Strong Growth in Mobile Sector Continues to Dominate Uzbekistan's Telecom Landscape

Uzbekistan has been struggling to bring its telecommunications system up to the standard found in developed countries. For a long time the country's telecom infrastructure as a rule remained outmoded and inadequate. But, over the last decade or so, the situation has been by degree improving. This has been largely due to the government's decision to give national priority to Information and Communications Technologies. Accordingly there has been an upward trend in the country's telecom market, with increased investment in infrastructure, expanding subscriber bases and rising earnings. The government's strategic policy was to privatise the incumbent operator Uzbektelecom and to open the market to competition pursuant to this agreement the country's aim to join the World Trade Organization.

The telecom sector has been regulated

The telecom sector has been regulated by the Uzbek Agency for Communications and Information, the successor to the Ministry of Communications. In 2005 UzACI approved a telecommunications investment program for the period 2005-2010. Among other things, the program aimed to increase the total number of fixed lines to 2.2 million and achieve 100% digitalisation of the network by 2010. The fixed line subscriber target was not achieved with subscriber numbers nevertheless languishing below 1.9 million. And only about two-thirds of the network was digital by 2007, however by March 2009 this has been lifted sharply to 89%, according to the Uzbek Agency for Communications and Information, and effectively achieved the target by end-2010. The five year program as well aimed at accomplishing marked improvements in mobile telephone and internet penetration. By 2011 both these segments of the market had shown significantly gains, with the mobile market in particular having expanded rapidly over the five years. Subscriber numbers had jumped from around one million to 21 million over the plan period. Funding for the investment program was provided by loans and foreign investment, the internal resources of operators and providers, as so then as from government funding.

The state-owned national telecom operator, Uzbektelecom, has been responsible for the fixed-line network and services throughout the country. It was originally granted a monopoly on international voice services and VoIP (Voice over Internet Protocol) until 2007. Meanwhile, it controlled around 98% of local fixed-line telephony services and 96% of international fixed-line services. Little progress had been made in the government's plans to privatise Uzbektelecom in spite of several attempts over the last decade to sell off a sizable stake to a foreign investor. The only alternative fixed-line providers were Buzton and East Telecom, nevertheless they were servicing only limited numbers of subscribers.

Mobile telephony first arrived in Uzbekistan in 1992; by 2003 there were seven mobile networks offering a range of technologies and standards. All of the mobile operators were majority owned by foreign investors. Some consolidation in the mobile market took place in 2006 when Buztel was absorbed into the Vimpelcom-owned Unitel; it seemed highly likely that furthermore consolidation would occur in the not too distant future.

While the country's internet market had enjoyed considerable growth since 2002, internet access remained limited for the majority of the country's population. By end-2005 internet user penetration stood at just over 4%. Nevertheless, by early 2011 it had jumped to 20%.

- Three mobile operators - MTS, Unitel and UCell - had launched 3G networks late in 2008, during a fourth, the CDMA operator UzMobile, launched a CDMA 3G equivalent in 2010;

The positive front

- On the positive front, nevertheless, has been the accelerated conversion of the fixed network from analogue to digital with the 100% target close to achieved in 2010;

- The published statistics indicate substantial recent growth in internet usage, with internet user penetration reported at 20% by 2010;

The increased rate of expansion

- In spite of the increased rate of expansion, broadband penetration was only around 0.3% of the population coming into 2011;

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

- Key statistics- Market and industry overviews- Major operators- Regulatory environment- Infrastructure- Mobile market - voice and data- Internet market, including broadband

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