TBY talks to Ali Ağan, CEO of Azercell, on the growth and development of the local mobile industry, and the future of 3G communications.
TBY What was the background of Azercell’s creation in 1996?
ALİ AĞAN Established in 1996, Azercell was a joint venture between Azertel and the Azerbaijani Ministry of Communications. As of the first quarter of 2008, the company was fully privatized by its foreign partner. Azercell is a consolidated subsidiary of TeliaSonera with 55% of shares via Fintur Holding. Despite incessant and intensifying price competition, the company has managed to maintain its leadership in the market since its first year of operation. In 1998 Azercell was among the first in the world to introduce a pre-paid system for its subscribers, branded SimSim, and this opened a new page in the development of telecom services in Azerbaijan. We have installed 1,800 base stations in Azerbaijan and covered almost all mountainous areas. The company takes its strength mainly from its wide coverage area, strong network, extensive range of services, world-class customer service, highly professional staff, and strong shareholder support. Azercell is also a pioneer in many innovations for the local market such as the pre-paid system, mobile banking, DataKart, mobile marketing, Blackberry services, one-stop-shop offices, and so on. By the beginning of 2010, Azercell had approximately 4 million subscribers. Additionally, the company holds a majority of Azeronline shares, Azerbaijan’s leading internet service provider. This ISP was established as a limited liability company in December 1999. Currently, Azercell owns a 55% market share. The company also offers very competitive roaming services.
How have you seen the mobile telecoms market in Azerbaijan develop since then?
Back in 1996 the market in Azerbaijan was new and open for a new company. Over the years, demand has grown for new technologies and quality. That is why Azercell keeps on paying special attention to increasing its quality and range of innovative services as well as the development of the subscriber base. Today, mobile technology’s impact is broad, and it is playing a key role in education. Information sharing through mobile networks and access to the internet via mobile phone brings education to geographical areas where people do not have access to teachers, schools, or educational resources. Our partnership with the national electric network operator will soon result in significant operational efficiency in electricity meter measurements. Similar remote management service projects are ongoing with the urban transport network as well. GPS-based fleet management services have been available to businesses as well now for more than two years. In general, the role of value-added services has become crucial nowadays and is going to grow in the near future.
What is the split between post-paid and pre-paid subscribers, and in which segment are you seeing the strongest growth?
Mobile users in Azerbaijan prefer pre-paid as a means of payment traditionally. More than 95% of customers use pre-paid, but Azercell has also seen strong interest in post-paid recently with the launch of attractive products like Dövletcell, which is a very advantageous tariff plan for the employees of state-funded companies and organizations.
How has Azercell’s data/internet component developed? What is the state of your application for a 3G license?
From our launch we have observed strong interest in GPRS/MMS services. In our first year it was a hit in the market in terms of our innovative image. This continued for several years. Consequently, Azercell has put significant focus and investment into the 3G network in readiness to launch the next generation network. Upon the allocation of a frequency and license, we are keen to provide world-class service to the Azerbaijani population.
What projects are you developing to further Azercell’s growth and presence in the sector?
Some studies suggest that by 2020 the profits generated from this sector will reach the same level as the oil income of Azerbaijan. Nowadays, the development level of the ICT sector is three times faster than that of the country’s overall economic development. Azerbaijan is on the eve of welcoming 3G technology, and as a leading telecoms company we are looking forward to opening this new page in our industry. The introduction of this technology will open up more opportunities for Azercell to present its customers more diverse services with an improved speed. Azercell has always been a pioneer in bringing up-to-date innovations to Azerbaijan. For example, at the annual telecoms exhibition in 2010 Azercell demonstrated a number of advanced technologies, such as the “mobile wallet”, a technology used as a bus or metro ticket, as well as a purchasing tool, and much more. At the same time, Azercell was the first company to demonstrate the real capabilities and operation of LTE technology at an exhibition in Baku. We believe that as the relevant regulatory issue is settled, we will start deploying more and more new services based on the latest technologies available in the world.
What key regulatory changes do you think need to be made to improve the competitiveness and profitability of the mobile telecoms market here?
I think that liberalization of the mobile market should be the ultimate goal for the regulator. Interconnection rates should be normalized for more level competition. New technologies available internationally should be faster integrated into the local market. Necessary legal changes should be made to allow and promote the spread of new services such as mobile commerce, location-based services, mobile banking, and so on.
What is your general outlook for the mobile sector in Azerbaijan over the medium term?
In the medium term I expect the Azerbaijan market to become even more penetrated and sophisticated with new technologies and services. Mobile broadband will be shifting customer demand to new levels. Mobile technologies will continue to spread into the lives of the people making it a richer, easier, and faster experience. Azercell, as it has done throughout its 15-year history, will take the leading role in this trend and provide the best and most cutting-edge technologies and services.
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