Cell operators’ Clash
14 July, 2011
Cell operators’ Clash

Magti GSM, one of the key players at Georgian cell market, hardly escaped the black list of the State Procurement Agency of Georgia after it failed to meet its assumed responsibilities against the state tender.  Magti argues that Geocell, its chief opponent cell operator, is responsible for the failure as it blocked Magti’s activity. Geocell dismisses the accusation. 

Magti accuses Geocell in a latent attempt to blackmail Magti in order to be unrivaled in coming tenders.

Magti who had won the state

tender on providing hot-line service to Tbilisi Transport Company last May, informed other communication operators acting in Georgia that a special numeration resource is earmarked for providing free hot-line service to Tbilisi Transport Company and asked them to exempt the hot-line calls from charging starting June 1st of 2011.  Magti pledged to cover all due charges for the entire call traffic. Magti managed to contract 22 companies including fixed lines except Geocell. The latter  turned down the request under the pretext that it has already refused similar requests of other communication operators as far as activation of free of charge numbers was a heavy burden to its billing system and human resources.   Geocell also reminded Magti that a provision of Georgian National Communication Commission (GNCC), has already defined a special free-of-charge numeration resource scheduled to become operational this fall and till activation of this numeration Geocell refrains itself to perform  similar service.

As a matter of fact Geocell went ahead by charging the calls requested by Magti and the latter failed to meet responsibilities assumed in frames of the state tender. The Procurement Agency consequently annulled the tender and was to put Magti on the black list that might affect both Magti’s image and commercial side alike. If been blacklisted Magti could not participate in any tender within a year and enjoy any profit out of it.

Magti accused Geocell in blackmail and appealed to GNCC to settle the dispute and impose sanctions on Geocell for violation of market rules. According to Irakli Lobzhanidze, Deputy Director General of Magti in Marketing, Geocell let Magti down so as to get rid of key competitor. Geocell counterclaimed that Magti had to agree the issue with Geocell not post-tender but before it and in this case Magti could avoid lamentable results it faced.

“No market regulation obliges us to implement free of charge services, “Sandro Sadaghashvili, Head of Legal Department of Geocell, explained to Georgian Journal. “Magti had to agree this issue beforehand, we would explain our terms and agree payment issues and no mishmash would happen. Magti could not dictate its terms, it is a matter of financial agreement. But it behaved impudently as it drew out its own decisions and informed us only afterward.”

Lobzhanidze counterclaims that Magti did not agree the issue beforehand because it was a standard thing and Geocell has no right to dismiss it.

“Geocell has no right to refuse as far as it has been implementing similar service to other market operators. It was a standard agreement, there was nothing new and that’s the reason we did not inform Geocell beforehand. We would agree things beforehand if there was anything new,” Lobzhanidze told GJ.

GNCC discussed the case on July 8, 2011 and approved Magti’s claim only partly: it obliged Geocell to activate the free of charge service to the requested numeration till the special free numeration service [accounted on all companies use for services like hot-line and other special intellectual needs] becomes operational in November of 2011. The key ground was that Geocell is performing similar service to other operators. To avoid further misunderstandings the regulatory body obliged the litigant companies to back the deal though a contract with a detailed description of possible fees and obligations.  More positive result to Magti is that the Procurement Agency did not blacklist the company thanks to GNCC decision.

However GNCC did not impose any sanctions on Geocell for violation of market rules as found apt that Magti had to agree the issues with Geocell prior to the tender.

“GNCC will not interfere in the contract details as it is a matter of private companies to outline provisions of their agreement,” Khatia Kurashvili, PR of GNCC, said.

Ultimately, the questioned contract is not as urgent as it was to Magti as the contract on provision hot-line service to Tbilisi Transport Company is revoked. A new tender has been announced but nobody participated in it as yet. Magti does not plan to appeal to it again.

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