Business consultancy project

PEST Analyses

Fugure.1 PEST Analysis

Political	Regulatory Involvement	Social	Fixed-line penetration
	Government assistance in digitalization		Mobile communication development
	Licensing reforms		Substitution of fixed line communication by mobile
	Private sector development		Smartphone penetration
Economic	GDP Growth	Technical	The integration of the infrastructure
	GDP growth from ICT sector		The expansion of cellular network coverage
	Increase of the Telecom Revenue		The development of ISP
	Decrease of Inflation rate		High-speed data availability and Fixed and Mobile Broadband development

Political
Azerbaijan telecom market is under the regulation of the Ministry of Communications and High Technologies. Telecom Market has passed the immense modification and infrastructure enlargement after the adoption of the specific law on Telecommunications of the Republic of Azerbaijan in the 14 June 2005. The telecommunication law maintains the evolution of the sector by protection the local and foreign direct investment. In addition to the ratification of the peculiar law for the structuring further business progress, the strategic roadmap for the extension of ICT sector was approved in December 2016 by the president of the Azerbaijan republic. The government allocated 585 million AZN (344$ million) for the growth of the infrastructure, both state and private sector through collaboration and reinforcement of the ICT business environment. The budget assigned to the expansion of the mobile telecom and fixed and mobile broadband integration. (Dreyzina & Ibrahumov, 2017)
The strategic roadmap divided into two parts:

1. 
   Fortifying the governance structuring:
   
   • 
     Establish an independent regulatory body
     
   • 
     Liberalize the telecommunication market
     
   • 
     Increase mobile infrastructure investments
     
2. 
   . Clarification of productivity rise and provision of the lucrative business landscape
   

• 
  Extend technology-based operations in business environment
  
• 
  Upgrade technology education with the involvement of businesses
  
• 
  Increase knowledge and skills in the ICT sector and apply ICT in the education system Consequently, within government support and ICT sector attained the significant growth and acquired the industry penetration.
  

Economic
After the ratification of the new law in the Y2005, the ICT sector has contributed enormous support to the economy country.

The share of the income of communication services from the total ICT sector revenue was around 80%. Considering the previous years, in the period of Y 2005-2012, the compound growth of the telecom sector was around 17% and year on year growth rate was positive (stat.gov.az, 2018). However, starting from the year Y 2013, the income from the communication services became stable, but in the year 2015-2016 the annual growth rate went down and expressed the downward trend. The decline of the ICT income caused due to the local currency depreciation which put the short convulsion the whole country economy
The currency depreciation caused additional financial burdens on the country economy by decreasing exports and increasing import prices. ICT sector as any business area impacted by currency volatility mostly due to the high capital investments to telecom equipment purchased abroad and experienced the economic recession.
Meanwhile, after Y2015 local currency depreciation in the Y 2016, the exchange rate volatility leveled off and hovered above 1.7 AZN per USD line. The increasing oil prices let the State Oil Funds make large money transfers to the Central Bank account within Y2017, which performed to achieve the exchange rate stability. (Center of Economic and Social Development, 2018)
Consequently, the stable exchange rate positively affected all the business area and particularly the ICT sector. According to the information of the statistical committee of the Republic of Azerbaijan and the information from the Statista portal, the economic indicators of the country in the last two years expressed the positive changes by comparing with corresponding Y 2017. Besides, based on Asian Development Bank January 2019 report, the total generated income from the ICT sector reached 1,391 million and the ICT GDP set about 2.2% of the total none-oil sector GDP. (Asian Development Bank, 2019) In comparison with 2018, the overall economic metrics show improvements, the overall GDP and GDP from the ICT sector has increased, and inflation rate slightly declined. (stat.gov.az, 2018), (statista, 2019). (statista.com, 2019)
Table.1 Economic Metrics