The FINANCIAL - Magticom Leaves its Competitors Behind, Likely Due to Government Tender

Magticom Leaves its Competitors Behind, Likely Due to Government Tender

Magticom Leaves its Competitors Behind, Likely Due to Government Tender

The FINANCIAL -- The first four months of 2014 have brought millions worth of loss in retail revenue for Geocell, Mobitel and Silknet. Magticom is the only telecommunications company to have seen an increase in comparison with the same period of the previous year.

The total revenue of mobile operators without VAT and excise amounted to GEL 144,360,447 during the first four months of 2014, down from the GEL 144,479,487 of the same period of the previous year.

According to the Georgian National Communication Commission (GNCC) the number of subscribers totalled 4,492,222 in April 2014, up from the 4,212,625 in April 2013.

As of April 2014, the number of subscribers of Magticom was 1,867,880, up from 1,842,554, (an increase of 25,326 subscribers) from the same period of the previous year. Geocell has lost 123,971 subscribers so far in 2014. The company counts 1,495,934 users, down from the 1,619,905 from April 2013. Mobitel has lost 131,765 subscribers in 2014. The number of Beeline’s users amounted to 975,005 in April 2013, while in April 2014 it was 843,240. The number of Silknet users amounted to 29,432 in April 2014, while in 2013 their number was 30,897.

The companies declined the chance to explain the changes in their revenues.

In a consolidated tender announced by the Competition and State Procurement Agency (CSPA) Magticom won the right to offer mobile communication service to government agencies in 2013. CSPA revealed the winner according to a set of criteria. Magticom offered a call fee of 0 tetri (call out beginning at 5 tetri) to the subscribers of Geocell, while Geocell offered a fee of 1 tetri. The total number of Magticom’s newly gained subscribers amounted to 150,000.

The retail revenue of Magticom was GEL 61,262,234 as of the end of April 2014, the sum was GEL 57,886,605 for the same period of the previous year. The comparative data shows growth for Magticom of GEL 3,375,629.

The retail revenue of Geocell in January-April 2014 was GEL 53,863,621 while it was GEL 56,020,668 in April 2013. Geocell, the leader on the mobile market up until the government change in 2012, has seen revenue loss of 2,157,047.

Mobitel LLC, operating under Beeline, has lost GEL 1,161,097, y-o-y comparison shows. The retail revenue of Mobitel in 2014 was GEL 28,483,742 while it was GEL 29,644,839 in April 2013.

The revenue of Silknet reached GEL 750,850 during the first four months of 2014, down from the GEL 927,375 of the previous year; the reduction amounted to GEL 176,525.

The retail revenue of mobile companies totalled GEL 453,431,294 in 2013. The annual revenue of Magticom in 2013 was GEL 205,081,110. Geocell ended the year with GEL 166,485,877. The revenue of Mobitel amounted to GEL 87,284,858 and Silket - GEL 2,532,737.

The average revenue per user in April 2013 was as follows: Magticom - GEL 8.05, Geocell - GEL 8.78, Mobitel - GEL 8.80, and Silknet - GEL 7.13.

As of April 2014 the average revenue per person was GEL 8.30 for Magticom, GEL 8.74 for Geocell, GEL 7.33 for Mobitel and GEL 6.39 for Silknet.

Minutes of use as of April 2014 for Silknet was 233.34, for Magticom - 180.45, Mobitel - 128.36, and Geocell - 134.36.

Mobile operators have seen revenue reduction from mobile internet as well. The sum amounted to GEL 5,662,130 during January - April 2014, down from GEL 5,858,371 of the same period of last year.

The revenue of mobile internet for Magticom amounted to GEL 2,255,817, from January - April 2014, down from GEL 2,699,107 from the previous year. Geocell attracted GEL 2,006,101, down from GEL 1,840,309 from January-April 2013. Mobitel has seen a slight increase as the company’s revenue from mobile internet was GEL 1,395,491 in 2014, while in 2013 it was GEL 1,317,414. Silknet counted GEL 4,721 in January-April 2014, up from GEL 1,541 from the same period of the previous year.

Giorgi Datukishvili, Dean at Caucasus School of Technologies, Caucasus University, does not predict any loss of revenue for mobile operators due to the increasing number of smart phones with their free messaging and voice applications.

“Free conversational applications will not affect mobile operators’ business. Operators will sell the internet and not just for voice or text messages. The people who use the free applications in many cases are active users of the internet. Therefore, they use bytes to access other information and, in accordance, are charged. Free internet access is not of high quality everywhere, so in those places users have to pay the operators,” said Datukishvili.

“Over time, in the next 3-4 years, users will mostly switch to smart phones. The further price reduction and technological development in this area will determine this trend,” Datukishvili told The FINANCIAL.