The FINANCIAL - Geocell and Beeline Promise not to Increase Tariffs

Geocell and Beeline Promise not to Increase Tariffs

Geocell and Beeline Promise not to Increase Tariffs

The FINANCIAL -- The retail revenue of Georgian mobile operators has totalled GEL 32,591,494.52 as of March 2016, down from GEL 32,764,559.46 from the same period of the prior year.

The regional economic crisis that also had an impact on Georgia, as well as access to free communication services, are the main factors contributing to the reduction in mobile operators’ revenue. Leading Georgian mobile operator Magticom has recently decided to increase tariffs for its subscribers by a significant amount. The other market leaders Geocell and Mobitel (Beeline) say a price increase is not on their agenda.

There are five mobile operators on the Georgian market for now. According to the Georgian National Communication Commission (GNCC), the number of subscribers as of March 2016 has totalled 4,695,164. With 1,958,031 (or 42%) Magticom is the market leader. It is followed by Geocell - 1,565,974 subscribers (or 33%); Mobitel (Beeline) - 1,147,215 (24%); Silknet - 23,564 and GlobalCell - 380.

The retail revenue of mobile operators has amounted to GEL 32,591,494.52. The total income of operators has been reduced from GEL 32,764,559.46 from March 2015. Despite this reduction, Magticom was the only company to have seen an increase in revenue this year. The revenue of Magticom totalled GEL 15,055,550 as of March 2016, while the sum was GEL 13,920,530 in March 2015. The retail profit of Geocell was GEL 11,497,762 in March 2016, down from GEL 12,308,933.46 from the same period of the previous year. A reduction has been shown for Beeline. The revenue of the company was GEL 5,923,791 in the third month of 2016, while the figure was GEL 6,398,164 in March 2015. Silknet gained GEL 113,787.52 in March 2016, down from GEL 136,932 as of March 2015. 

“We are constantly observing the situation on the market, which is quite tough in terms of tariff policy. Georgia is distinguished by having quite low tariffs and this makes the competition tense, although the company is still managing to maintain its existing tariffs on the market,” a representative of Geocell told The FINANCIAL.

Like Geocell, Beeline also said that maintaining existing prices is on their agenda. “We are not considering a tariff increase. Our strategic policy consists of offering consumer-oriented products, which, by all means, includes affordable prices,” said Natia Ghlonti, Beeline.

According to Georgian newspaper Banks & Finances Magticom intended to increase service tariffs in April of the current year. The company informed its subscribers about the decision via SMS notification, but the company had not released an official statement. According to the SMS notification, starting 27 April service tariffs would mainly increase for Bani subscribers by GEL 0.14 and the price of a minute’s talktime would be GEL 0.24 instead of GEL 0.10.

However, the reality turned out different anyway. Increased tariffs touched both Bani and Magti subscribers. Starting 27 April Magticom subscribers pay GEL 0.24 for a minute’s talktime with Bani, Magti and Bali subscribers, as well as with clients of any other cellular or landline networks in Georgia.

Apparently, having signed an official agreement with internet provider Caucasus Online, Magticom obtained a monopolistic state on the telecommunications market and decided to put an end to the era of low tariffs on the cellular communications market and bring back 1990s tariffs.

Currently, the cost per minute at Beeline with its subscribers is zero, all other operators - GEL 0.10. Almost similar is in Geocell.

The recent revenue reduction of mobile operators has been explained by an overall economic drop and increased access to free communication sources.

According to Ghlonti from Beeline, profit reduction for mobile operators is a global trend. “A significant increase of internet usage has contributed to it. Consumers are using communication services such as Viber, WhatsApp, etc. Of course this causes a reduction of usage of traditional voice services.”

Contrary to Beeline, Geocell links the profit drop with existing macro-economic conditions. “The reason for such a trend is regional micro and macro-economic factors, which affected the market locally, as far as we are part of the open economic space. Local currency devaluation and decrease of international remittances to the country also affected the mobile market. Apart from this, the existing fierce price competition leads to operators’ revenue decrease as well, and this factor is clearly reflected in revenue. Compared to previous years, the revenue of one company used to be almost equal to today’s total mobile market revenue,” the official from Geocell explained.

Technological development caused a massive switch of users to free means of communication, while for mobile operators, it is connected with a reasonable amount of investment (for 4G deployment, for instance). So, maintaining profitability remains a big challenge for companies.

According to the official from Geocell, this is another global worldwide trend - OTT (Over The Top) players offer their services to end users not via mobile operators. “Therefore, all operators around the world face the challenge of having new solutions and approach, which will enable them to stay commercially profitable. Hopefully in Georgia there will be the same approach towards OTTs as well and operators will be enabled to offer more convergent services to customers, where OTT value-added services will be integrated. But apart from this, speaking on 4G deployment, the company continues to invest in developing the latest technologies in the country, despite the abovementioned tough situation on the market in terms of price competition and clear revenue-decreasing trend. In addition to this, nowadays the penetration of 4G-enabled smartphones is very low. So, it is still the issue of future perspective, when 4G technologies will be fully commercialized by companies. For a technology-driven company it is very important to have a constant follow-up of global innovation pulse and to introduce advanced solutions and services to its customers.”

In line with the increasing number of smartphone users and online phone subscribers, the number of companies creating mobile applications for the purpose of staying in touch with their customers is increasing in Georgia. Customers are becoming more active in demanding applications of their favourite companies for their mobile phones as well.

According to the recent report of The FINANCIAL, there were about 200,000 iPhone users in Georgia and around 21,000 Android and Windows-operated smartphones currently registered in Geocell’s network as of 2014. Mobile app Georgia Android gives a list of all the most popular android apps and games for Georgia, uniting more than 200 apps in one place.

Among the most popular apps are those offered by the leading banks TBC Bank, Bank of Georgia, Bank Republic and Liberty Bank. They allow users to carry out banking operations directly from their phones, pay utility costs and make transfers.

Other popular apps offered by Silknet include: Ibaby; Iota Reader;; Kinoshi (showing movie listings and showtimes for Tbilisi’s cinemas); GPC mobile app; (provides users with the best currency exchange rates and the best fuel prices available in Georgia); and, Tbilisi Metro.


Author: Madona Gasanova