TURKMENISTAN: U.S. COMPANIES DOMINATE WIRELESS

UNCLAS ASHGABAT 000786 SENSITIVE SIPDIS STATE FOR SCA/CEN; EEB E.O. 12958: N/A TAGS: ETRD PGOV EINV TX SUBJECT: TURKMENISTAN: U.S. COMPANIES DOMINATE WIRELESS TELECOMMUNICATIONS MARKET ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (SBU) SUMMARY: One of the few segments of the Turkmen market that U.S. brands and products largely dominate is wireless telecommunications (excluding cellular phone communications). For the most part, Turkmen military and law enforcement services, state-owned energy companies, and private businesses working in Turkmenistan use telecommunications equipment produced by such U.S. companies as Motorola and Harris and are distributed by local distributors that know how to navigate the Turkmen bureaucracy. While one local company predicts that smaller distributors will enter the market as time goes on, the Turkmen wireless telecommunications market will not grow in the near future to the point where a U.S. company could justify in economic terms opening of a branch or office in Turkmenistan. END SUMMARY. ¶3. (SBU) Although the cellular telephone market has grown rapidly in Turkmenistan over the last two years, the market for other types of wireless communications remains relatively narrow. Non-cellular wireless communication systems and equipment are mostly used by the Turkmen military and law enforcement services, and the Ministry of Defense and Ministry of Internal Affairs are the principal users of Motorola and Harris equipment in Turkmenistan. Another market segment for non-cellular wireless telecommunication is Turkmenistan's oil and gas sector. A number of foreign energy companies intensively use this kind of communication in their in-field operations. State-owned oil and gas companies seldom employ non-cellular wireless telecommunication systems and still prefer land-based phone lines which run along gas and oil pipelines, and are often referred to as "gas phones" in Turkmenistan. When Turkmen state-owned oil and gas companies finally decide to modernize their communications, they have the potential to become one of the largest users of wireless telecommunications technologies. ¶4. (SBU) All American companies selling their products in Turkmenistan operate through local distributors rather than having an office in Turkmenistan. A representative at local distributor Imdat HJ, which enjoys a near-monopoly position in distributing wireless systems and equipment in Turkmenistan, said that given the low sales volume in the market, U.S. companies find it more economically feasible to work through distributors. It is also more practical for a Turkmen company to engage on behalf of the U.S. company in the time- and resource-consuming process of obtaining the necessary licenses from the Ministry of Communications. ¶5. (SBU) COMMENT: The fact that state organizations are the principal users of wireless communications equipment and systems -- and that one local company has a near-monopoly as their supplier -- indicates that long-established personal ties with government organizations and officials are crucial for successful operations in this market. The Imdat representative acknowledged that smaller distributors will enter the market as the number of foreign companies needing wireless communications for operations in Turkmenistan grows. Nevertheless, the Turkmen wireless telecommunications market will not grow in the near future to the point where a U.S. company could justify in economic terms opening of a branch or office in Turkmenistan. END COMMENT. MILES