Georgian cell market becomes more consumer-friendly
16 June, 2011
Georgian cell market becomes more consumer-friendly

Georgian cell market became more consumer-oriented thanks to recently introduced ported number service. Cell calls became cheaper and consumer has a choice. Cell operators on the other had cannot enjoy as higher profit as they used for more than a decade in Georgia but they shy to disclose the loss figure. 

Demand for portable numbers totaled 54 500 based on the latest available data provided by the Georgian National Communication Commission (GNCC), and more than 49 thousand is already ported. GNCC

accentuates that Georgian cell market became consumer-oriented thanks to portable numbers mechanism that became operational starting this past February. Thanks to portable number mechanism that enables consumer to change cell operator without changing private cell numbers plus introduction of the cap consumer tariffs cell calls became much cheaper compared to 2011.

The retail tariffs three cell operators Magticom, Geocell, and Beeline [a part of Russian-based VimpelCom Group] charged consumer prior this past April totaled 32 tetri, 28.8 tetri and 25 tetri per minute respectively. GNCC that halved interconnection tariff [active between cell operators on outgoing calls] from 14.8 to 8 tetri per minute in summer of 2010 found the retail tariffs unfair  and to force cell operators to make tariffs more consumer-tailored introduced portable number mechanism this winter and fixed cap retail tariffs as 24 tetri per minute starting April of 2011. And the remedies did work.

Competition became stronger and to keep their market positions and subscribers all the three cell market players offered new preferential tariff packages so as cell calls became twice and sometimes four-fold cheaper compared to previous tariffs. Through new tariff packages Geocell and Magti cut down tariffs to 1 tetri per call. And yet they charge call-starts by 5 tetri and 10 tetri respectively, and this preferential tariff package costs GEL1 per month, consumer pays about 6-11 tetri per minute now instead of previously active 28.8-32 tetri.

Portable numbers mechanism revealed an obvious market leader: Geocell. It managed to attract more than 25 600 new subscribers starting February and about 14 thousand left its network in favor to Magti and Beeline. And 20 600 out of this 25 600 were Magti subscribers and 5thousnad of Beeline. Magti attracted 13 300 subscribers: 10100 from Geocell and 5 thousand from Beeline.  Beeline managed to get 10100 new subscribers thanks to portable numbers: 6100 from Magti and 4 thousand from Geocell.

According to Irma Tskitishvili, PR manager of Geocell, their leadership is a logical result of the entire Geocell marketing campaign deployed for years that was tailored to top consumers interest, and as soon as subscribers were provided by a real choice they opt for Geocell. Magti and Beeline shied to comment. However in comments made when portable numbers became active they assured that portable number mechanism is a good competitive tool. Geocell agrees but accentuates that this mechanism cuts much ice with consumer rather than cell operators.

“Portable number mechanism is more consumer-oriented in fact,” Tskitishvili told Georgian Journal. “It creates a free option to consumer, on the other hand it is good competitive tool to companies as it makes clear who is more attractive operator, it filters the market as subscriber is no longer tied with a cell operator artificially and offers lucrative tariff packages to consumer again.”

The consumer-friendly policy as well as some unforeseen expenses deprived cell operators of their high profit margin this year. According to GNCC figures, Magti charging outgoing calls by 32 tetri per minute spent 17.1 [the figure includes all taxes and profit] in fact, and Geocell charging outgoing calls by 28.8 tetri per minute spent maximum 18.5 tetri itself. Otherwise,  Magti and Geocel having taken 49% and 43% of the  market respectively from income point of view have been enjoying 87% and 55% profit respectively.

Now Tskitishvili acknowledges that their profit margin really reduced after adoption of new game rules at the cell market: taxing cell calls by 10% of excise starting September of 2010, activation of portable mechanism that required millions to reequip the technical infrastructure, and fixing 24 tetri cap retail tariff, plus penalties imposed on cell operators for alleged violations of law that comapneis protested but paid off. Ultimately the profit margin of cell operators is down but how much Georgian operators shy to disclose. The figure will be available after the annual GNCC report will be aired by July 1st, 2011. GNCC claims it cannot air the data prior to the scheduled timeline.

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