Executive summary
The 2008 ‘war’ with Russia was a big setback for Georgia but its growth continues with the telecom sector a strong feature
Georgia has been successfully building itself into a modern economy. As the overall 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 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. 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 two licences in 2006. Mobile communication systems have become increasingly important for Georgia since the fixed-line networks in many places (particularly in rural and remote areas) remained outdated and a mobile phone represented the only means of communication, especially as mobile coverage has been provided for virtually the whole of Georgia.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 all 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 also privatised changing its name to Georgia Telecom. Competition had arrived for all segments of the telecoms market, including fixed-line voice services. Georgia has more 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 future 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 more than sevenfold over the previous seven years;
- Despite a faltering economy, the mobile market has continued to grow, although the rate of growth has certainly moderated;
- Georgia’s telecom regulator having awarded three 3G mobile licences, by early 2010 two of the operators, Geocell and MagtiCom, were claiming a total of one 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 effectively stalled, with almost no growth 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 also 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
Category
| 2010 (e)
| 2011 (e)
|
|---|
Fixed-line services:
|
|---|
Total number of subscribers
| 650,000
| 700,000
|
Annual growth
| 5%
| 11%
|
Fixed-line penetration (population)
| 15%
| 16%
|
Internet:
|
|---|
Total number of subscribers
| 240,000
| 300,000
|
Annual growth
| 36%
| 16%
|
Internet subscriber penetration (population)
| 5%
| 7%
|
Mobile services:
|
|---|
Total number of subscribers (million)
| 4.3
| 4.5
|
Annual growth
| 9%
| 6%
|
Mobile penetration (population)
| 97%
| 102%
|
(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 forecasts for selective years to 2020.
Data in this report is the latest available at the time of preparation and may not be for the current year.
Peter Evans
May 2011
