Global Insight Perspective | |
Significance | The smaller operator within Armenia's mobile duopoly has become the pioneer of 3G services in the country, launching in the capital Yerevan. |
Implications | The move is unlikely to alter the dynamics of the mobile market, given that rival operator K-Telecom is itself lining up a 3G launch before the end of the year. |
Outlook | The roll-out of 3G services and the imminent tender of a third national GSM licence are indicative of the growing maturity of the Armenian mobile sector, notable amongst the emerging, high-growth-potential markets of neighbouring Eurasian countries. |
Armentel has become the first operator to offer 3G in Armenia, launching the service in the capital Yerevan. It will offer 3G services to both post-paid and prepaid subscribers. The data-transmission cost of the service will be included in tariffs for GPRS packages. Services available to subscribers include video calls and full internet access. Armentel, fully owned by Russia's VimpelCom, had 655,000 mobile subscribers at the end of the first half of 2008. Rival operator K-Telecom, owned by VimpelCom's Russian rival Mobile TeleSystems (MTS), had 1.49 million subscribers at that time. A third mobile licence is scheduled for tender before the end of the year.
Outlook and Implications
Armentel's 3G Launch Unlikely to Change Market Dynamics: By pioneering 3G services in Armenia, Armentel has struck a small blow against its rival, but it is unlikely to be massively significant as K-Telecom is itself planning to launch 3G services before the end of 2008. K-Telecom, which operates under the "Vivacell" brand, entered the Armenian mobile market after Armentel, in July 2005, but has since usurped Armentel and now dominates the sector. Both companies were awarded 3G licences in October 2007, and by launching first Armentel will hope that it can claw back some ground by tapping into the country's organic growth potential and possibly even churning customers from K-Telecom. Given the current gap between the two operators in terms of market share, and K-Telecom's imminent 3G launch, however, it is unlikely that Armentel's announcement will massively alter Armenia's mobile market dynamics.Further Indication of Growing Maturity of Armenian Mobile Sector: The launch of 3G services by Armentel, coupled with the likely emulation of this feat by K-Telecom, is a further indication of the growing maturity of the Armenian mobile market. The sector has benefited from the arrival over the last two years of Russian giants MTS and VimpelCom, and the investments they have brought. Uptake levels have soared, and penetration at the end of 2007 was 57%, with Global Insight estimating that this figure will increase further to a very healthy 78% by the end of 2008. The country's Public Services Regulatory Commission (PSRC) has indicated that a tender for a third GSM licence will take place in 2008, and the entrance of another operator will positively benefit the market, acting as a natural buffer on tariff prices (see Armenia: 30 July 2008: Third Armenian Mobile Licence Attracts Interest from 17 International Companies—Reports). While many of the telecoms sectors of Eurasia are notable as emerging markets with high growth potential, Armenia is developing into one of the better-developed, more mature markets.