The Communications Commission has declared Magticom an operator with significant power on the mobile communications market. This decision was based on the comprehensive study of the mobile services market commissioned by ComCom. The EU experts found that the Georgian mobile communications market is uncompetitive and this circumstance will not change for at least the next three years without ex-ante regulation, causing Georgian consumers to suffer. The Chairman and members of the Commission fully agreed with the conclusions made by the experts and the mechanisms developed for the improvement of competition during the research. 

According to the EU experts, one of the main indicators of Magticom’s significant market power is the alarmingly high EBITDA margin (earnings before interest and tax, depreciation and amortisation) posted by Magticom. In 2022, Magticom’s EBITDA margin was 75% - more than twice the European average of 35%. 

Furthermore, the mobile services market analysis established that the market is stagnating, as evidenced by the fact that the market shares of mobile operators have remained virtually unchanged over the last 5 years. During this period, the number of subscribers went up by 10%, while revenues increased by 45%. Against this background, Magticom consistently retained market leadership, accounting for 41% of the subscribers and 49% of the revenues both in 2022 and 2023. The company also had a significant advantage over the other operators with regards to the average revenue per user (ARPU). 

According to the comprehensive study, Magticom’s significant market power is also evidenced by the fact that the company generated 51% of the total mobile internet traffic in the country in 2022, compared to 30% for Silknet and 19% for Cellfie Mobile. It is also worth noting that internet consumption increased by 592% over the last 5 years, during which time Magticom consistently retained market leadership. In 2022, Magticom carried 69% more internet traffic than Silknet, and 178% more than Cellfie Mobile. 

Notably, in 2019-2022 Magticom invested considerably more in its infrastructure compared to its competitors. For example, Magticom accounted for 58.6% of new base stations during this period, followed by Silknet (35.4%) and Cellfie Mobile (6.1%). Magticom also spent twice more on equipment than Silknet and Cellfie, which once again points to the company’s great power and potential. 

In light of the above, EU experts found that Magticom enjoys considerable advantage on the market and is an operator with significant market power (SMP), as it is far ahead its competitors in terms of financial resources, user numbers and infrastructure. Based on the recent trends, it is also unlikely that Magticom’s market share will fall below the 40% threshold established by the Georgian legislation for operators with significant market power, or that other operators will reach the said threshold. 

In 2022, the Communications Commission, together with the experts of the European Union, with the funding of the European Union and within the framework of the assistance for the implementation of the Association Agreement between the European Union and Georgia (“AA Facility II”), started working on the comprehensive research project on the Georgian telecom market. The project serves to enhance competition on the Georgian telecommunications market, bring the regulatory framework of Georgia closer to the European framework in accordance with the obligations under the Association Agreement, as well as provide diverse, high-quality and affordable services for consumers. The comprehensive study was conducted over two years. Research of this magnitude has not been conducted on the Georgian telecom market before. The study conducted by the EU experts was also revised by the experts of TAIEX (EU Technical Assistance and Information Exchange Tool). At all stages of research over two years, the Commission ensured the involvement of Georgian telecom operators. 

Together with the mobile market, the Communications Commission also carried out a comprehensive study of the fixed fibre-optic broadband market. The public administrative proceedings on this study began on 14 June, while the oral hearing is scheduled for 1 August.