Georgia Communication Profile 2O12

The 2008 ‘war’ with Russia was a large setback for Georgia but its increase continues with the telecom sector a strong feature

Georgia has been successfully building itself into a modern economy. As the in general Georgian economy becomes healthier, not surprisingly so too does the country’s telecom sector. With rising telecom revenues, there was a corresponding and significant increase in investment in infrastructure.

The year 2003 proved to be a political turning point for Georgia with the so-called Rose Revolution seeing a reforming government take control of government; at the same time, the influence of the telecom sector on the potential development of the country’s other economic sectors was starting to increase dramatically. Since 2003, telecommunications has become of the fastest growing sectors in the Georgian economy. The share of telecommunications in the country’s GDP has reached around 7%, a significant increase over levels achieved in the not too distant past.

The mobile segment of the market in particular has been booming. Into 2011, mobile penetration had reached 100% having increased sevenfold since 2003. MagtiCom was awarded Georgia’s first 3G licence in 2005, followed by a further licences in 2006. Mobile communication systems have become increasingly significant for Georgia since the fixed-line networks in a lot of places (particularly in rural and remote areas) remained outdated and a mobile phone represented the only means of communication, especially as mobile coverage has been provided for virtually the whole of Georgia.

There is evidence of a high level of internet usage in Georgia with an estimated user penetration of just over 30% into 2010. However, internet subscriptions are badly lagging behind the user numbers; the ratio of internet users to internet subscribers was estimated at around 7 to 1 into 2011. At the same time, fixed broadband internet has achieved a considerable market presence, comprising some 90% of amount internet subscriptions.

Even before the Rose Revolution in 2003 and the reforms that took place following that, positive regulatory developments had already commenced. These reforms included the establishment of an independent telecom regulator, the Georgian National Communications Commission in 2000. Although the privatisation of fixed-line operators Sakartvelos Telekomi and Sakartvelos Elektrokavshiri was commenced in 2001, the process suffered multiple delays. Sakartvelos Elektrokavshiri was finally privatised in 2006, having changed its name to United Telecom. Sakartvelos Telekomi was as well privatised changing its name to Georgia Telecom. Competition had arrived for amount segments of the telecoms market, including fixed-line voice services. Georgia has additional than 270 licensed and operational service providers and network operators.

In the meantime Georgia’s ongoing tension with its neighbour Russia is providing considerable uncertainty for the country and its next direction of its social and economic development. Despite this the economic outlook continues to be positive. In 2009 the World Bank ranked Georgia as the 15th easiest economy in the world in which to do business (up from 21st in 2008).

Market highlights:

• Coming into 2011 mobile penetration in Georgia had moved past 100%, having increased additional than sevenfold over the previous years;
• Despite a faltering economy, the mobile market has continued to grow, although the rate of increase has certainly moderated;
• Georgia’s telecom regulator having awarded three 3G mobile licences, by early 2010 of the operators, Geocell and MagtiCom, were claiming a total of million 3G subscribers between them;
• 3G subscribers had grabbed 25% of the total mobile subscriber base in just a few years;
• The development of the fixed-line network in Georgia has entirely stalled, with almost no increase and a system that is still short of 100% digital target;
• Although the interest in internet in Georgia is high, this segment of the market as well continues to lag in terms of subscriptions;
• With internet user penetration running at around 35% coming into 2011, subscriber penetration was a relatively low 5%. Nonetheless the market was starting to grow at a healthy rate;
• Broadband internet development started slowly but had moved into a rapid expansion phase. By 2011 broadband constituted the vast majority of internet access subscriptions.

Georgia – Key telecom parameters – 2010 - 2011

(Source: BuddeComm)