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Kazakhstan - Market Intelligence Report
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Market Intelligence Reports provide an invaluable mix of vital market data and background information, including telecoms regulation. Although the government of Kazakhstan has instituted a programme aimed at developing its telecommunications market through the phased liberalisation of basic and advanced services, little headway has been made so far in breaking the de facto monopoly on the fixed-line market held by incumbent state-controlled operator, Kazakhtelecom. The impetus for liberalisation is fuelled by the country's desire to join the World Trade Organisation (WTO), but membership would require Kazakhstan to clearly formulate commitments to liberalisation. Nevertheless, a new "independent" national regulatory authority, the Agency on Information and Communications (AIC), was set up in 2003 to become the central executive body authorised to oversee policy and governmental operations in the sphere of telecommunications. Currently, the AIC is not part of the government structure, although various ministries and government entities 'advise' the regulator on many issues. According to Kazakhtelecom, Kazakhstan's telecommunications market was worth Tenge205 billion in 2005 (approximately US$1,542 million), representing a year-on-year increase of 29%. Of the 2005 total, fixed telephony services accounted for 33.2%, having been overtaken by the mobile telephony segment for the first time that year, with a market share of 40.5%. In 2004, fixed telephony services had accounted for 37.1% of the market, whereas mobile telephony had accounted for 36.7%. The Internet services sector accounted for 10.0% of revenues in 2005, up only slightly from 9.3% in 2004. Services provided to operators accounted for 12.2% of revenues in both years. Although specific market shares for cable TV services have not been disclosed, Kazakhtelecom's data showed a decline in market share between 2004 and 2005 and possibly accounted for just 1% of revenues in 2005, down from 2% in 2004. Using this data, Kazakhtelecom estimated that its share of the fixed telephony market grew from 89.7% in 2004 to 90.3% in 2005, while its share of the market for private leased lines grew from 69.8% to 73.1% over the same time. Meanwhile, the incumbent grew its share of the Internet services market from 55.7% in 2004 to 61.6% in 2005, while the share of services provided to operators grew from 93.7% to 94.5%. In mid-2006, the government of Kazakhstan claimed that an ad hoc commission had proposed dividing the incumbent into a national network operator and several local operators in a bid to make the Internet, international, and inter-city services markets more competitive. The long-distance calls market was opened to competition at the end of 2004, but the six operators that have since received long-distance operating licences have only been allowed to provide services via their own limited infrastructure. New rules were to have been put in place in 2006 to obviate this problem, but it is not known if they have taken effect. Kazakhtelecom will enter the mobile market directly in 2007, when it launches a new GSM 1800 digital cellular service. The company acquired its licence in 2006 and will "compete" with fellow GSM licensees GSM Kazakhstan and KaR-Tel and CDMA licensee Altel. However, Kazakhtelecom is a substantial shareholder in Altel and GSM Kazakhstan, which may possibly lead to a conflict of interests.
This Market Intelligence Report was produced as part of
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