 Telecommunication
market in Kyrgyzstan |
By the totals of 2001 the communications market
give a certain optimistic view. In general the growth
of the market (including ISPs) made up almost 24%
in comparison with the year 2000, (basing on expert
estimations). For the country like Kyrgyzstan, this
is indeed a considerable growth. The main factor
of later are increase of the mobile communication
market by 33%, increasing and strengthening of the
competition on Internet Internet market the number
ISP at present time reached 19, also appearance
of the alternative operators on the local communication
market create competitive conditions.
The main obstacle in the development of the full
competitive telecommunication market is monopolistic
ownership of the country's telecommunication network,
which is called Kyrgyz TELEKOM, owned mainly by
the government and providing the main telephony
infrastructure that connects the whole of the country.
"Private people own about ten percent of the
shares and the rest belongs to the government. Seventy
six percent belongs to state property fund and fourteen
percent also to the government. Because it is a
joint-stock company it has a standard cooperative
structure -a meeting of holders, a board of directors,
management etc. As this company is considered to
be a strategic object president recommends the number
of directors and managers. Also, by the recommendation
of the World Bank this company is an object of privatization.
A deadline of privatization is the end of this year,
but I think that it is unreal to do it in such period
of time. As I estimate it could be accomplished
in the middle of May only if we find an investor."
Nasirdim
Turdaliev-The general director of Kyrgyz Telecom.
Although lately the share of Telecom decreased in
the total volume of market from 74% in 2000 to 72%
in 2001 also features the qualitative structural
changes in the sector.
This tendency will remain in future and moreover,
will have more intensive character. According to
estimations of specialists in 2002 this share will
be decreased to 65%. It will take place at the account
of increasing growth of mobile communication (almost
40%), activation of alternative operators of local
communication (the same high growth on the level
of 100% is expected for this year) and growth of
Internet, including Internet-cafe (30% growth is
expected). While the rates of growth for the whole
communication market will be decreased…
18% that is not bad as well. But the situation on
the market can be decreased gradually if not to
take some measures on support of outlined structural
movements in the communication sector.
Additional impulse for development of communication
will be undoubtedly given by privatisation of Kyrgyz
telecom (sale of 51% to strategic investor) and
demonopolization of the distant communication market.
It is expected that the prices for international
communication will be decreased in the beginning
of the next year and the local communication prices
will be increased oppositely. The market of prepaid
telephone cards will actively start to form almost
in the beginning of next year. Here one will observe
rather high competition and, as a consequence, this
segment will have quick development. But all this
is a result of semi-measures. Monopoly for main
line channels (the most restraining factor for development
of alternative operators) and for the "last
line", i.e. access (subscriber lines) to 375
thousand subscribers remain untouchable. As we have
noted earlier, one need to create competition mechanism
over here which will lead to very sufficient development
of communication and Internet in the country. It
is a security for successful development of communication
on the level of 15-20% per year and, as a result,
attractiveness of the market and inflow of investments
to the sector.
In general one should note that tendencies taking
place in the communication sector and structural
changes are not something unique, visa versa they
do reflect worldwide and regional tendencies. The
question is that which of the region's country will
literally work out the communication development
policy and will become the leader of region.
One of the leaders of the sector Bitel has diversified
in all aspects of the telecommunications market
gaining greater market shares every month. According
to General Director of Bitel
GSM Company . Mr
Turdukulov Nurbek " we have 6 different
activities. They are paging, ISP Internet service
providing, trading, computers, fax and copy machines,
walky-talky systems and radio communications. We
have affiliated centers in Osh and Karakol. Total
revenue of BITEL group this year will be 13 million
USD and the growth of the group is 30% but the growth
of the BITEL revenue is 80% annually and subscriber
base improved to 130% this year. So now we have
around 40,000 subscribers." |
In the nearest three
years we consider that the volume of mobile communication
will closely reach the volume of fixed lines market
and make up almost 30 mln.dollars. The coming of
one or two more operators in the next year will
facilitate it. Internet will also keep high development
level and IP-telephony related with it. The last
is one of the most prospective directions of development
in the country and in the world as well. Besides,
quite new segments of communication market will
appear, which does not have place now or having
pseudo-character. It refers to corporate networks,
intellectual communication services that in combination
are able to cover 5% of the total communication
market.
Besides segmentary (development directions) structural
analysis of communication sector it is interesting
to consider the sector's structure from the point
of view of communication market participants' sizes
(by determining the tendency) and geography of their
business activities.
The only biggest enterprise in the sector still
remains Kyrgyz telecom. Being national communication
operator it conducts its activities practically
in all the regions of country. As it is seen from
the table the income for 2001 made up 27780 thousand
dollars.
The other group of enterprises - average enterprises
(annual turnover is above 1 million dollars) includes
mainly mobile communication enterprises like "Bitel
GSM" (4835 thousand dollars) and Katel
(3380 thousand dollars). This group includes enterprises
with income from 1 to 10 million dollars and above
10 million USD we would conditionally refer to biggest
enterprises.The third group of enterprises are the
enterprises with income from 300 thousand to 1 mln
USD. This group, to our estimations, includes about
5-7 companies such as "Saima Net Telecommunications"
(600 thousand USD), Elcat
(600 thousand USD), Asia Info (600 thousand USD),
Ala TV (about 700 thousand USD), Smartcom (400 thousand
USD), and Areopage-Page (300 thousand USD). In general
the range of activities of those enterprises is
diversified from paging till cable TV. The general
feature is that all those enterprises have enough
history of their business activities from 5 to 7
years excluding Ala-TV. Its general director Mr.
Vladislav V. Nogai General Director of Ala TV. Cable
Television explains the future plans of the company
for expansion "In 1999 Ala TV was established
with 51% of the shares owned by Metromedia, and
49% by local companies. That same year a credit
agreement was signed with the Metromedia amounting
to 4$ million USD. In the first year and a half
we spent $ 2.5 million, quite enough for us to establish
the entire communication cable network. For the
first 3 years we managed to achieve a penetration
of 20% of the market, which is around 14500 apartments.
By the end of the year, our plans are to have on
board 15000 active subscribers. "
The fourth group comprises enterprises with an income
of 300 thousand USD. It is the most numerous division
and mainly their activities are related with new
directions of communications (Internet cafe, Call-back,
Content providing). A smaller group of enterprises
for traditional communication are also present here,
such as construction-assembly works, etc. About
17 Internet providers, 60-70 internet-cafes made
up this group, and despite the numerous enterprises
in this group they are controlling less than 5%
of communication market.
However at present time about 90% of the market
is controlled by three enterprises. In the nearest
2-3 years one can expect the structural changes
of the following character. The number of enterprises
composing the first group will reach 3 maximum 5
(that is hardly realistic). While the share of 1st
group will increase. Probably, the share of mobile
telecommunication group will decrease. Concerning
small enterprises of Internet provision and especially
the groups, so called Internet cafes, they will
be increasing steadily. At least, the number of
the later group's participants will increase twice.
Unfortunately, there is a tendency that mobile providers
and especially Internet cafes share of shadow economy
is very high. Nevertheless they serve as a good
basis for increasing competition in the new sectors
of communication.
Thus, we can observe the concentration of incomes
with 3 operators in the communication sector. Such
a phenomena is characteristic for the economies
with undeveloped competency environment and not
high degree of market liberalisation, i.e. monopolistic
economy of developing countries. There is a critical
necessity in structural changes aiming to distribute
incomes among considerable number of operators.
It will make communication market more dynamic and
stable to economic shocks. This concentration is
also a consequence of low investment activities
in the 3rd and 4th groups.
Speaking about the investment climate it is necessary
to point out not only tendencies for development,
but also registration and law procedures. "Nowadays,
Mr. Otorbaev starts dealing with this issue. They
start developing a matrix of actions in order to
overcome different problems, which the investors
face. There is also a special department where you
can come and get all the information you need. It
seems that the situation is normal now, but it might
aggravate later on." Nasirdim
Turdaliev-The general director of Kyrgyz Telecom.
Although the tendencies in the development of mobile
communications are growing faster, and the services
becomes cheaper, the main problem to overcome is
a monopoly of KYRGYZ
TELEKOM on international calls, and the most
important obstacle is modification and modernization
of telephone lines, and convergence of later to
the digital level. Such innovation will of course
will profit most of all the fourth group of small
Internet providers, thus the market of later develop
and becomes more necessary and accessible. |
