The Fight for Caucasus Online Begins
26 November, 2015
The Fight for Caucasus Online Begins
Russian company Mobitel, also known as Beeline, has joined Silknet and Magticom on the list of companies who wish to purchase Georgian internet provider Caucasus Online (CO). On November 13, the Georgian National Communications Commission received a statement requesting their advance consent on Mobitel obtaining a CO retail service segment. The statement elaborated that CO plans to split itself in two, selling its retail segment (involving broadcast transit, personal digital phone and internet service) to Mobitel while continuing to operate
as usual in the wholesale segment (network infrastructure and communication lines).

“Still, all the sweet talking aside - if the Turks or Russians get their hands on the cable, they will essentially cut off Georgia’s air and use it as leverage to further their own interests. They will enter the market with fixed prices like they used to do before, and internet will become a far more expensive commodity than it is now.” - Mamia Sanadiradze, former owner of Caucasus Online

Before the submission of Beeline’s declaration, the Communications Commission had already given advance consent to Magticom regarding purchase of CO assets. As the word goes, the rest is just paperwork, which means that all that remains is for the companies to agree on the conditions of the exchange. Naturally, CO will wait for the best offer, especially if the regulatory body of the Commission gives Mobitel the right to compete as well. However, the scenario of Magticom and Beeline coming to an agreement and picking CO apart asset by asset is also not out of the question. Regardless of what happens, the fight for CO will be grand, with a company owned by late ex- President Shevardnadze’s son-in-law, Gia Jokhtaberidze, on one side and a daughter company of Russian VimpelCom on the other. It is noteworthy that the Communications Commission has recently declined a similar claim from Silknet on the grounds that its merging with CO would represent a hazard to competition in the sector.

It is not yet known who will obtain the greatest treasure of CO – a 1200km-long underwater optical cable. It was laid at the bottom of the Black Sea in 2008, connecting Georgia to Europe and thus providing the shortest and most direct way for internet access.

However, this is not all. It is not yet known who will obtain the greatest treasure of CO – a 1200km-long underwater optical cable. It was laid at the bottom of the Black Sea in 2008, connecting Georgia to Europe and thus providing the shortest and most direct way for internet access. This cable allows CO to provide 55 percent of Georgia’s internet connectivity, 85 percent of Armenia’s and 50 percent of Azerbaijan’s.

After it became known in August 2015 that CO was for sale, a rumor emerged that Azeronline, a state-owned Azeri internet provider, was interested in purchasing the cable, which caused quite a commotion. Along with immense financial value, the optic cable also carries political significance – the party that owns it will have in its hands a powerful tool for controlling the flow of information. Thus, the Azeri interest in purchasing it is hardly surprising. Loaded to capacity, this cable can generate great profits while also putting 85 percent of the Armenian internet under Azeri control and allowing the authorities to regulate and/or censor a massive amount of information.

Some time ago, the former owner of CO Mamia Sanadiradze made a public statement, proclaiming that Turk Telekom was also interested in purchasing the submarine cable. We remind our readers that during the National Movement party’s rule, CO ended up in the hands of then-President Mikheil Saakashvili’s associates and Mamia is still fighting to get the assets that were taken from him back.

Mamia Sanadiradze, former owner of Caucasus Online:

“I confirm Turk Telekom’s interest in purchasing the company; their representatives called me recently and inquired about how my legal process was going. So, now we have Turks and Russians, whose offers we refused before, coming back for a second attempt at grabbing the cable. But now I have my own investor and I intend to purchase the cable myself. However, this is the last thing those currently running my company want, since all the injustices committed by them over the last five years will come to light if this happens. They do tell me that they don’t mind, but when push comes to shove and I openly declare my intention to buy the cable at a market price, they start getting obscure. My case has been sitting uninvestigated for three years now, and my company may well be sold off to someone else; however, the buyers are also thinking that it’s not worth the trouble, since CO assets may become disputed at any time.

Still, all the sweet talking aside, if the Turks or Russians get their hands on the cable, they will essentially cut off Georgia’s air and use it as leverage to further their own interests. They will enter the market with fixed prices like they used to do before, and internet will become a far more expensive commodity than it is now. If the cable ends up in wrong hands, not only will it represent a political risk, but a major economic hazard as well.”

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