Azerbaijan is making steady progress in developing its telecommunications sector, but still faces numerous problems

Poor quality infrastructure has been a major ongoing problem. Only around half the telephone lines in the country are digital. The monopoly held by Azerbaijan's Ministry of Communications & Information (MCIT), among other things, results in the high cost of satellite connections. As well as being a commercial operator through its role in AzTelecom, the ministry is both policy-maker and regulator for the telecoms sector in Azerbaijan. The country’s significant dependence on international funding has also made it difficult for any long-range planning in the development of the sector.

Azerbaijan has had a surge in economic growth. Real GDP growth for 2005 had surged to an estimated 18%, following on a similarly strong growth rate in the previous few years. A rapid increase in capital investment has been largely responsible for the country's recent impressive growth record. Much of the capital investment has been from foreign sources and mainly directed toward oil and gas field developments.

The government-owned AzTelecom is the country's main telecommunications service provider and is controlled by MCIT. A second operator, AzEuroTel, won a licence to provide international communication services in 1999. There are also four joint ventures offering telephone services, two mobile operators, and a number of ISPs operating in Azerbaijan. All these ventures have been established under the MCIT.

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