Executive summary
Despite a range of uncertainties Georgia’s telecom sector features strong growth.
As it confronts a series of major challenges, Georgia is continuing to build itself into a modern economy. One of the biggest problems is the troubled times it has been having with its neighbour Russia. The country has also had to cope with the severe setback suffered in 2009 following the onset of the Global Financial Crisis. With the overall economy progressively becoming healthier again, it is not surprising that so too has the country’s telecom sector. At the same time, rising telecom revenues have seen a corresponding and significant increase in investment in infrastructure. Despite some recent positive news for the telecom sector, there remains much to be done.
The year 2003 proved to be both a political and economic turning point for Georgia with the so-called Rose Revolution seeing a reforming administration 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 one 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. Coming into 2013, mobile penetration had reached 130%, subscriber penetration having increased tenfold in nine ears (13%%%since 2003. MagtiCom was awarded Georgia’s first 3G licence in 2005, followed by a further two licences 3G in 2006. Mobile communication systems have become increasingly important for Georgia since the fixed-line networks in many parts of the country remained outdated (particularly in rural and remote areas) and the mobile network represented the only means of communication, especially as mobile coverage has now been provided for virtually the whole of Georgia.
An encouraging feature of the telecom market in Georgia is the high level of internet usage; there was an estimated user penetration of around 35% into 2012. However, internet subscriptions have been lagging somewhat behind the user numbers in relative terms. Nevertheless the gap is being bridged quickly, with fixed broadband internet having achieved considerable market presence in the last few years. Broadband now comprises some 80% of all fixed 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 (GNCC) 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 also eventually privatised changing its name to Georgia Telecom. Competition had arrived for all segments of the telecoms market, including for fixed-line voice services. Georgia has more than 320 licensed and operational service providers and network operators.
In the meantime Georgia’s ongoing tension with Russia continues to provide a level of uncertainty for the country and the future direction of its social and economic development. Despite this the economic outlook continues to be positive. In a telling report considering the timing, the World Bank ranked Georgia in 2009 as the 15th easiest economy in the world in which to do business (up from 21st in 2008). By 2012 the country had improved even further, holding 9th place in that year’s World Bank survey.
Market highlights:
- By early 2012 mobile penetration in Georgia had reached 130%, subscriber penetration having increased tenfold over the previous nine years;
- Despite signs of a faltering economy, the mobile market has continued to grow, although the annual rate of growth has been more unpredictable;
- Georgia’s telecom regulator having awarded three 3G mobile licences, there has been a strong uptake of new generation subscriptions; 3G subscribers had claimed an estimated 40% of the total mobile subscriber base by early 2013;
- The introduction by the regulator of mobile number portability in 2010 has seen a significant movement of subscribers in the market place in the first two years of operation;
- Despite a somewhat erratic growth pattern, the fixed-line network in Georgia has seen solid overall growth with fixed teledensity reaching almost 35% in early 2013;
- Although the interest in internet in Georgia is clearly high, subscription numbers remain modest;
- With internet user penetration running at around 45% by end-2012, fixed internet subscriber penetration was a relatively low 10%;
- In the meantime, mobile broadband has been offering a cheap effective means of accessing the internet. By 2012 broadband constituted about half of all internet access subscriptions.
Georgia – Key telecom parameters – 2012 - 2013
Category
| 2012 (e)
| 2013 (e)
|
|---|
Total number of fixed-line subscribers
| 1,500,000
| 1,700,000
|
Total number of fixed internet subscribers
| 500,000
| 590,000
|
Total number of mobile subscribers (million)
| 5.5
| 6.0
|
(Source: BuddeComm)
This report provides an overview of the trends and developments in the telecommunications markets in Georgia. Subjects covered include:
- Key statistics;
- Market and industry overviews;
- Major operators (mobile and fixed);
- Regulatory environment;
- Infrastructure;
- Mobile market;
- Internet market, including broadband;
- Telecom market subscriber scenario forecasts for years 2015 and 2020.
Data in this report is the latest available at the time of preparation and may not be for the current year.
