The telecommunications industry is the largest sector in Azerbaijan, and a major contributor to the country’s economy. Actually, after the oil sector, the telecommunications sector contributes the most to the national GDP, and increasing competition will allow for lower prices and the strengthening of the 4G TD-LTE standard, as well as facilitating the migration to 5G in the near future.
The Internet penetration rate in Azerbaijan was of almost 79% by mid-2019. The country’s teledensity is of some 17 fixed-lines per 100 persons, whereas mobile-cellular teledensity has increased to 103 telephones per 100 persons. The majority of telephones are in the capital, Baku, or other industrial centers. Azerbaijan has moderate mobile, mobile broadband and fixed broadband penetration compared to other Asian nations (2020).
The growth of the mobile subscriber base has dwindled in the Azerbaijan market over the past five years. The first “Pre-5G” network operating on the TD-LTE standard is expected to be developed soon. On the other hand, fixed-line broadband market penetration has grown slightly. Mobile broadband subscribers have nevertheless grown quickly thanks to the rollout of 4G infrastructure and a growing range of mobile broadband packages available. The mobile broadband market is expected to enjoy increasingly faster speeds offered by the mobile operators as 4G and 5G networks are rolled out around the country. The National TV and Radio Council (NTRC) regulates broadcasting in the Republic of Azerbaijan by managing the radio frequency spectrum, granting licenses and resources to operators, protecting consumers from inappropriate and inefficient broadcasts, and encouraging technological innovations.
Azerbaijan’s high economic growth in the past was attributed to rising oil exports and to some non-export sectors. However, declining oil prices caused a 3.1% contraction in GDP in 2016, and a 0.8% decline in 2017, highlighted by a sharp reduction in the construction sector. The economic decline was accompanied by higher inflation, a weakened banking sector, and two sharp currency devaluations in 2015.
Azerbaijan has made limited progress with market-based economic reforms. Pervasive public and private sector corruption and structural economic inefficiencies remain a drag on long-term growth, particularly in non-energy sectors. The government has, however, made efforts to combat corruption, particularly in customs and government services. Several other obstacles impede Azerbaijan’s economic progress, including the need for more foreign investment in the non-energy sector and the continuing conflict with Armenia over the Nagorno-Karabakh region. Long-term prospects depend on world oil prices, Azerbaijan’s ability to develop export routes for its growing gas production, and its ability to improve the business environment and diversify the economy.
Fixed-line telephony in Azerbaijan is largely centralized in the hands of the state-owned telecom provider AzTelecom, which also acts as a commercial ISP. The company was established in 2008 to work in fixed communications market by offering international fixed telephone connection, internet as well as data and voice transport. Azertelecom network connects Azerbaijan with neighbors from north to south and from west to east to Russia, Georgia and Iran. The company holds licenses covering various fixed services including voice, internet, VPN, VoIP and integration of existing PSTN lines.