The year 2018 was marked by stabilization of Azerbaijan’s ICT market after stagnation a year earlier. Thanks to balanced macroeconomic policy and structural reforms, Azerbaijan managed to stop the GDP fall and set a course for further economic growth.
In many ways, this was possible thanks to the tightening of monetary policy and more flexible exchange rate policy. In the real sector of the economy, the rise in oil prices, as well as the growth of non-resource sectors of the economy, such as agriculture and services, led to recovery in aggregate demand and budget revenues.
There are a number of prerequisites that indicate the growth prospects of Azerbaijan’s IT market for the near medium term, according to IDC (International Data Corporation).
The most positive changes that in the coming years will significantly affect the economy of Azerbaijan as a whole and the IT market, in particular, include restructuring of the banking sector, reforms in the social sphere, completion and launch of major projects.
In the medium term until 2022, Azerbaijan’s IT market will maintain double-digit growth rates largely due to measures taken in the field of government digitalization, the spread of broadband internet and digital transformation of the private sector.
The average annual growth rate of Azerbaijan’s IT market until 2022 will be 12 percent (IT equipment will grow 11 percent, IT services will grow 16 percent and software will grow 16 percent). By 2022, the volume of the IT market will double in comparison with the level of 2018 and will amount to $1.6 billion.
Despite that there were few key events in the ICT market of Azerbaijan in 2018, nevertheless, the year was quite successful. Commercial enterprises successfully developed, new products and solutions appeared. The key events of the year are the following:
Owner of Azercell mobile operator changed
The purchase of 51.3 percent of shares of the company Azertel [the sole shareholder of the Azerbaijani telecommunications operator Azercell] by the state company Azintelecom from the company Fintur became the key event of the beginning of the year.
Fintur is owned by Telia Company (58.55 percent) and Turkcell (41.45 percent).
The agreed price for 51.3 percent of Fintur’s shares in the company Azertel was 222 million euros, which implies the cost of capital of 432 million euros for 100 percent of Azercell shares and a company’s value worth 197 million euros based on cash and without debts.
Prior to signing the deal, Telia Company completed a rigorous verification of the buyer’s trustworthiness and declared satisfaction with the results of all proper checks and controls.
Azercell’s re-branding is the subject of discussions and this issue is likely to be resolved in 2019.
Establishment of a center for the study and development of the cryptocurrency market and blockchain technology
The second quarter of 2018 was marked by the creation of a center for the study and development of the cryptocurrency market and blockchain technology, which included interested market participants.
During the year, the Center regularly organized meetings, held discussions as part of which issues of regulation of the cryptocurrency market and blockchain technologies were touched upon, provided advisory services, prepared proposals on issues of legal regulation of the industry.
If we consider that this is a completely new direction for everyone, there is an urgent need to exchange experience, study aspects of the legal regulation of the cryptocurrency market and using the blockchain technology.
Readiness to use the blockchain technology and SMART contracts in housing and communal services was recently announced by the Ministry of Justice of Azerbaijan.
The ministry provides over 30 electronic services, there are about 15 information systems and registries. They include the register of “electronic notary”, “electronic court”, penitentiary service, information systems of non-governmental organizations, population register, etc. The planned project “Mobile Notary Office”, which provides for the accumulation of all notarial documents in one case, seemed interesting.
The plans of the ministry also include, among other things, the implementation of a project related to notarization of an electronic document.
It was announced that in the future, SMART contracts will be implemented in the field of public services (water, gas and electricity). That is, the existing contracts of citizens for public services will be transferred to SMART contracts, and this will ensure transparency and will allow preventing the facts of falsification in this area. Moreover, the citizens themselves will be able to independently control all these processes.
In world practice, the blockchain technology is successfully used where the registry is formed. Most of the services of the Ministry of Justice (registers and databases of the population) are based namely on them.
Launch of the second telecommunications satellite - Azerspace-2 / Intelsat-38
A significant event of the year was the launch of the second communications satellite - Azerspace-2 / Intelsat-38. The countdown for the launch of the Ariane 5 carrier rocket with a satellite on board was started on September 26 on the launch platform ELA-3, in the Guiana Space Center.
Azerbaijan's telecommunications satellite Azerspace 2 reached its test orbit on Dec. 18. The company noted that the satellite will be in test mode for about two months, after which it will be placed in its final orbit of 45 degrees east longitude. At the beginning of 2019, the satellite will be transferred to the management of Azercosmos and then the satellite will be fully ready for commercial operation
Flight VA243 will become the 100th mission for the Ariane 5 heavy-lift launch vehicle and the 300th for the Arianespace launcher family.
Azerspace 2/Intelsat 38 is designed to provide a number of telecommunication services and will serve two operators - Intelsat SA and Azercosmos OJSC.
The satellite will provide coverage of the growing demand for DTH (Direct-to-Home) satellite broadcasting services in Europe, Central and South Asia, the Middle East and in the part of Africa south of the Sahara desert for Azercosmos OJSC.
The satellite will also provide continuity of service from the orbital position of 45 degrees for the Luxembourg office of the Intelsat SA, as well as will ensure the delivery of DTH services to Central and Eastern Europe, the Asia-Pacific region, and the provision of communication services in Africa.
The Azerspace-2 satellite, worth $190 million, is projected to bring revenue to Azerbaijan's economy in the amount of $400 million.
The satellite has been built on the 1300-series platform (SS/L 1300). The satellite will be placed at an orbital position of 45 degrees. The lifetime of the satellite in orbit will be 15 years.
The first communication satellite Azerspace / Africasat-1a was launched into a geostationary orbit at 46 degrees east longitude on February 8, 2013. This satellite was also launched from the Kourou space base by Arianespace company.
Issuance of a new generation of identity cards
The year was also marked by the transition to identity cards of a new generation, the issuance of which started on Sep. 1. IDs are issued to the Azerbaijani citizens in stages. The Certification Center handles requests from personalization centers operating under the Ministry of Internal Affairs of Azerbaijan. Based on the received requests, the center prepares certificates and sends them back.
Three application programs are recorded on the chip of IDs: personal information about the owner, data of two certificates (the first one is an authentication certificate, the second one is for e-signature) and the so-called domestic applications, the functions of which make it possible to automatically update information about the ID holder.
For example, in the case of a change of last name or updating marital status information, this data will be automatically updated by means of special card readers as soon as a citizen applies for a service to an authorized body where these devices will be installed.
Citizens having received new IDs can independently activate the e-signature integrated into them. The term for using the e-signature is three years.