Cell communication Market in Georgia

Maka Ghaniashvili

According to statistical data Georgian consumers spend about 70% of their incomes on communication services.

According to Georgian National Communications Commission annual report, number of active subscribers of mobile communications network increased with 895 000 and reached a record high making 2,600,000 in 2007. Total revenues of electronic communication service market reached Gel 1.114 billion while in 2006 the indicator amounted to Gel 1 billion, 6.6% of the country’s GDP. Percentage of the revenues received according to the segments of electronic communications (that covers Fixed telephony, Mobile telephony and Broadcasting) are distributed as follows: Mobile communications contributed as much as 63.28% to the total revenues of electronic communications (in 2006 it reached 65%), fixed communication service – 29,53%, TV and radio broadcasting sector – 7.19% (5.22% in 2006). In 2007 mobile phone operators’ revenues increased with 54 million compared to the figures of 2006 and exceeded Gel 704 millions. Monthly revenues from the mobile communications service per person made GEL 57.74 in 2000 while in 2007 it climbed to GEL 217. Number of cell communication network subscribers annually grows while the World Development Indicators Database research implemented in 186 countries of the world showed that Georgia has one of the most expensive mobile phone tariffs. The cost of 1 month average package consisting of 25 phone calls and 30 SMS has been taken as an estimating point. The cost of this package in Georgia amounts to USD 44, 09. Therefore Georgia occupies the third place after Kuwait and Sierra Leone according to this indicator. Average monthly cost of the package in the world amounts to USD 12, 25. The most expensive tariff is in Kuwait – 75,18 USD, the cheapest tariffs is in Venezuela and Sri Lanka – USD 1,17. As for our neighboring countries – Azerbaijan occupier 46th place (USD 15, 11) Armenia occupier 12th place (USD 8, 31), Turkey – 71st place (USD 12, 57) and Russia – 148th place (USD 5,96). Average cost of the mobile phone call per minute in the world amounts to about USD 0, 05. In Georgia it amounts to 29 Tetri – about 17,7 cents (except for special tariff schemes).
What is the reason of such high mobile phone call tariffs in Georgia? Is it caused by expensive licenses and services or simply by monopoly? Geocell and Magti are two biggest mobile phone service providers in Georgia. They have almost monopolized the market – out of 2.4 million subscribers total number of Magti and Geocell subscribers reaches 2.4 millions. Accordingly, the third player on the market is Beeline with 200 000 subscribers that has been operating since 2007. It is not a decision maker on Georgian mobile phone market yet.
Such environment in Western developed countries is qualified as a lack of competitiveness in business segment. It is considered to be the result of corresponding carter agreement. As a result anti-monopoly service is involved in the case and carefully examines a company. If the fact of artificial increase of tariffs is proved, companies become obliged to decrease tariff rates. Anti-Monopoly service is abolished in Georgia. As for Georgian National Communications Commission that coordinates tariff rate policy, considers this environment to be ordinary and quite common.
Now a few words on the above mentioned three mobile operators and their development on Georgian communication market.
Geocell became the first GSM operator in Georgia in 1996. The company implemented the first call in 1997. It was founded by Turkish and Georgian parties. The Georgian party was the holder of the controlling stock of the company. After the merger of Geocell and Georgia’s third GSM operator GT Mobile in 2001, Geocell became an authorized holder of GT Mobile followed by the very important introduction of the pre-paid system, Lai-Lai. From the year 2003, the holder of the controlling stock is one of the leaders in the world communication market, Swedish-Finnish Company TeliaSonera. Accordingly, Geocell together with 4 GSM operators, functioning in Azerbaijan (Azercell), Moldova (Moldcell), Kazakhstan (Kcell) become a member of the leading group Fintur Holdings B.V.
In May 2006 Geocell became an owner of UMTS license (2100 mh frequency). In the nearest future UMTS license will give subscribers opportunity to become part of 3rd generation technologies, and use such services as high speed data transfer (up to 2mb), video calls, mobile TV and many other services. The company has already contributed USD 77 million to the economy of the country. It’s planned to increase this figure to 130 millions. Geocell covers over 95% of the populated territory of the country, has about 1 700 000 subscribers and 45 service offices.
Controlling stock of Magticom is owned by Selford that bought shared from American Metromedia in 2007. The company has more than 1 700 000 subscribers. MagtiCom network covers over 97% of the populated territory of Georgia. 43 offices across the country function currently. It contributed more than 646 million Lari to the economy of the country within the 10 years’ period of its operation.
As for Beeline – “Mobitel” Ltd. is a Georgian cellular communication operator. The company has the license for providing cellular communications services. Mobitel was founded in November, 2003, and at that time was not engaged in commercial activity. Company Mobitel, the subsidiary of the United Joint-Stock Company “VimpelCom” (Russia), obtained the license on use of radio-frequency spectrum in GSM-1800 standards in 2005. JSC “VimpelÑom” has 51% share in “Mobitel” Ltd. The VimpelCom Group includes cellular communication operators, rendering their services in Russia, Kazakhstan, Ukraine, Tajikistan, Uzbekistan and Georgia. VimpelCom became the first Russian company, which was included in New-York stock exchange listing (NYSE). The Company shares are quoted on NYSE under the symbol “VIP”. Beeline has more than 200 000 subscribers in Georgia and about 40 offices.
Although the situation has not drastically changed, still it’s a fact that following a new gamer on the market Geocell as well as Magticom offers great variety of available tariff schemes.
Besides Magti and Bali, Magticom offers another new brand Magti Fix to its customers. Magti Fix is a high-standard wireless fixed telephone service that enables customers to use telephone communication as well as EC_DO technology based high speed internet service. To join the network you need a special wireless fixed telephone set operating 450 MHz frequency band, which is available at the Customer Service Offices of MagtiCom. 8 90 ****** will be Magti Fix index. Till October 1, communication from Magti Fix to Magti Fix is toll free, Till October 1 you can call the USA, Russia and other CIS states (code 00) at 20 tetri per minute. Geocell also has a new service to offer: a subscriber can choose 5 favorite numbers and speak to them for only 5 tetri per minute. Although these are just various tariff plans. Main tariff remains 28 tetri per minute. Tariff schemes became even more actual following the appearance of ‘Beeline’ that has offered variety of services to its subscribers. For example Beeline tariff scheme ‘Friends’ gives an opportunity to a subscriber to speak with any mobile operator for only 15 tetri. Tariff plan ‘Say Hello’ enables call to CIS countries for 27 tetri. “Stay Close’ offers subscribers 9 tetri tarrif. New tariff plan ‘Children’s First’ has been created for children as well as for their parents. Children can choose 5 favorite numbers and call them for 5 tetri per minute. 2 tetries will be added to their balance as bonus for incoming calls. Special tariff is offered to them for additional services (SMS, MMS, GPRS): SMS – 2 tetri, MMS – 15 tetri. Outgoing call price to Beeline and other mobile operators as well as land lines is 25 tetri.
Other news also takes place on this market. Namely, Geocell has already launched a new product – 3.5G. HSPA (High Speed Packet Access) technology is the next step for developing 3G, that allows data transferring 10 times faster. Previous speed of data transfer was 386 kb/sec, while today it is already possible for 3.6 mb/sec. Geocell 3G is automatically transferred to HSPA regime and does not require additional activation from subscribers. All services, such as: WAP GPRS, GPRS Internet, MMS, Video Streaming will automatically work with high speed if your mobile is supported by HSPA. Geocell broadband is HSPA fixed terminal, to which 4 PC are switched simultaneously, and Internet speed reaches 3.6mb/sec. Modem already has Wi-Fi function and works in 100 meter radius. Geocell broadband offers subscribers: Internet traffic without limit, free HSPA terminal, free installation throughout Georgia. Monthly fee is 99 Gel.
‘Geocell Connecting’ is a high speed, simple and mobile internet that enables to use internet anytime and anywhere: while your journey or business meeting. Internet speed reaches 3.6mb/sec. internet tariff cost till 1 gb is 35 Gel per month, till 5 gb – 69 Gel. Besides, certain changes were introduced in rules of calling from June 1, according to which Magticom and Geocell subscribers need to dial nine numbers to connect each other. Accordingly six figure number connecting has abolished. According to Geocell, subscriber will have to dial index: 877. As for Magti and Bali, subscriber will have to dial either 899, 895, 892 or 898.