TBY talks to Jayhun Mollazade, CEO of AzQtel-SAZZ, on the inception of the company, WiMAX technology, and local internet penetration rates.
What encouraged you to move from the diplomatic field into the telecoms industry and move back to Baku to establish AzQtel-SAZZ?
My interest was not so much in the telecommunications sector in general, but the development of the internet and internet services in emerging economies. When I started to work in the international market, I came to realize that the development of the internet was one of the most attractive products to export from the US to developing countries, because it is needed to support companies from all types of sectors such as media, banking, and energy. Toward the end of the 20th century the world started to shift into the digital era, offering great business opportunities and growth potential, and increasing the feeling of globalization among people. After serving as a formal and informal diplomat for Azerbaijan—my home country—for many years, I decided to move into international business, first running the business development department within a company very active in the ICT sector in different parts of the world, testing internet technology in various countries. Finally, I convinced my partners and shareholders to put all of our focus and emphasis on the Azerbaijani market, because of the importance given by President Ilham Aliyev to the ICT sector and the potential growing market that was forming here, where internet penetration was still low and data access was very expensive. From the first stages of our deployment in Azerbaijan, we have been focusing on wireless broadband internet technologies, testing WiMAX technologies. In 2005, we incorporated AzQtel into our operations, and in 2006 we were granted radio frequency licenses. Between 2008 and 2009 we developed a commercial pilot plan, covering downtown Baku with 19 base stations. It was a success and in the following two years we started to expand our network, and we managed to cover all of Baku and other cities like Sumgait and Mingachevir, building more than 180 new base stations. In 2010 we also underwent a rebranding exercise, adopting the name SAZZ, creating a new and more modern logo, and implementing a new marketing strategy, which brought us a solid reputation within the country for being a quality wireless broadband provider with affordable prices—AZN25 for unlimited downloads with up to 10 Mbps speed, and a 24/7 technical support center.
What are the advantages of Mobile WiMAX technology as compared to other internet technologies?
We have yet to see the worldwide deployment of 4G technology, Azerbaijan included. The wireless market in our country offers different possibilities: GPRS, HSDPI, and 3G. As compared to the latter, WiMAX is superior in terms of bandwidth and Sazz has also brought affordable prices to the table. Another important factor to keep in mind is that WiMAX technology has been implemented worldwide with high levels of success, and in this regard analysts and vendors have named us as one of the 10 most successful WiMAX deployments around the world after taking into account our entrance into the market and the rate of customer subscriptions.
What level of coverage does your network currently provide, and what are your strategic plans to expand it?
At the moment we cover all of Baku, Sumgait, Mingachevir, and the vast majority of suburban areas located by the Caspian Sea on the Absheron Peninsula, reaching about 3 million people under our coverage. We are currently in our third expansion phase, in which we will be adding 240 more base stations, and reaching the regions of Azerbaijan starting from Ganja, where our services will soon be available. Toward the end of 2012 we will be covering the vast majority of each regional city center in places like Gabala, Sheki, Gusar, and Lenkaran.
How has your customer base evolved over this period of time, and what is the company targeting for the future?
Since we underwent the rebranding exercise, SAZZ has managed to attract tens of thousands of new customers, something we are very happy about. In this regard, 2011 was a very successful year. Right now, 85% of our customers are individuals, whereas the remaining 15% are banks and SMEs.
How would you evaluate the level of internet penetration in Azerbaijan?
Azerbaijan was an underpenetrated market in terms of broadband, and even though internet penetration has grown rapidly in the last few years, the penetration rate is still low and the country is yet to achieve its peak. The explosion is still ahead of us, and both wireless and wired internet access service companies will be competing for the biggest piece of the Azerbaijani broadband cake for the next three to five years.
What are AzQtel-Sazz's plans for the future?
We are in a decisive expansion stage. Our major plan is to make Sazz a national broadband operator by spring 2013, and in so doing we can also move into a better competitive position from a coverage perspective. Looking at the Azerbaijani broadband market as a whole, we think that in five years from now there will be 4 million-5 million broadband users in Azerbaijan, and the aim is to grab at least 15%-20% of the market. Regardless of what happens in the future, it is a win-win situation for us, because today we already sell more USB modems than all the other wireless operators put together.
In your opinion, how has the business environment in the ICT sector evolved in Azerbaijan over the last few years?
Azerbaijan has a Soviet legacy in the telecommunications industry, and it does not need to build infrastructure and networks from scratch. Having said that, infrastructure is developing quickly thanks to government regulation and private companies, which are leading fast-paced growth in the sector. I think the appointment of Ali Abbasov as Minister of Communications and Information Technologies was a turning point within the sector, making it more vibrant. The internet has played a key role in broadening ICT sector perspectives. Many software development and system integrator firms have pushed the sector onward, making a difference overall. Today, you can see many Azerbaijani companies expanding their activities abroad, and that is a sign of how much the sector and the business environment in the sector has developed in the last few years. In this regard, AzQtel-SAZZ is also looking into expanding its activities abroad, with current negotiations with companies in Kyrgyzstan and Georgia.
© The Business Year - March 2012