Azerbaijani telecommunications sector is the second largest recipient of foreign investment after the oil industry. The largest FDI stock is in the mobile telephony, followed by a number of enterprises with the foreign capital in land lines operating companies, internet providers and cable TV companies.
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The Azerbaijani telecom market is expanding rapidly. It is one of the leading sectors contributing to the economy growth. Azerbaijan has the potential to attract investments and boost growth in a range of information and telecommunications services. Growth of corporate networks will provide demand for software and infrastructure integration services; Internet security applications; and web hosting services. Telecommunication services boomed in Azerbaijan in 2001-07. Especially in the last two years, cell phone companies have begun operations, whereas the fixed-line operator remains in public hands and presents a very good opportunity for privatization. Development of ICT in the Republic of Azerbaijan has been accepted as a priority sector. The "National Strategy on Information and Communication Technologies for Development of the Republic of Azerbaijan (2003-2012)" was approved for this aim by the relevant decree of the President of the country. Rapid development of ICT sector in recent years strengthened Azerbaijan's advantage in comparison with OECD countries. ICT is considered as one of the priority spheres in the non-oil sector and there is a great potential for future development of this sector in Azerbaijan.
Advantages of the sector:
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Azerbaijan has a potential comparative advantage in comparison with OECD countries;
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ICT development is accepted by the government as a priority sector;
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The rate of added value is high;
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Purchasing power of population increases year by year and this can increase the need in ICT products;
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The level of use of ICT technologies in production process grows year by year.
Opportunities:
Analyses show that, despite high indicators of development, ICT sector needs still to attract investments and to enhance its opportunities by below mentioned reasons.
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As ICT sector is concentrated mainly in Baku city and more than 90% of services delivered fall to the share of Baku there are big opportunities to develop the sector in the regions;
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The use of computers and Internet at enterprises functioning various sectors of economy and creation of web pages is at a low level;
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Production of ICT products in the country is underdeveloped and their export is at an insignificant level.
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The use of Internet and computer is very underdeveloped in regions;
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The price for Internet is high, the speed is low and connection is difficult (connection is implemented mainly by dial-up, which is not used in developed countries anymore);
