“The Georgian mobile service market is stagnating and uncompetitive, with Magticom having significant market power in terms of market share, customer numbers and infrastructure. This creates barriers to market access and stifles competition, creating a restricted environment for consumers. To resolve these issues, it is necessary to impose specific obligations on Magticom, such as the duty to allow all interested operators access to its infrastructure.” This assessment was delivered by the EU experts who were involved in preparing the comprehensive study. Results of the comprehensive study were presented by ComCom member Ekaterine Imedadze and the head of the EU group of experts, Domagoj Jurjevic. The event was also attended by the other EU experts participating in the study – Christian Jean-Pierre Francois Marie Hosefid, Stanko Taskov and Peter Lundy. 

During the meeting, attention was focussed on the harm caused to Georgian consumers by the uncompetitive market. One of the factors pointing towards this circumstance is the alarmingly high EBITDA margin (earnings before interest and tax, depreciation and amortisation) posted by the Georgian operators in 2022, which significantly exceeds the EU average of 35%. Magticom’s EBITDA margin was 75% in 2022, underscoring the operator’s significant market power. Silknet (61%) and Cellfie Mobile (45%) also posted figures above the EU average. Furthermore, Magticom invested the same amount from its revenues in the development of infrastructure as its European counterparts. This means that against the background of its higher EBITDA margin, the company is investing a much smaller share of its revenues in infrastructure than the European operators. There is also a big gap between the profit margins of Magticom and other Georgian operators, which creates a potentially damaging and uncompetitive environment in which the operator with significant market power can operate independently from competitors and consumers. 

The presentation also addressed the factors that create unfavorable conditions for customers. Specifically, the presenters talked about the comparative price analysis carried out by ComCom, according to which Georgian subscribers have to pay premium prices for high-speed and high-volume services compared to their European counterparts, or choose low-speed and low-volume services. In addition, they noted that there is no motivation to invest in new technologies on the market, which means that Georgian consumers are constantly lagging behind the innovations implemented across the world. The presenters also highlighted the fact that in recent years, operators implemented changes in retail tariffs simultaneously. Specifically, a change in one operator’s tariffs was immediately followed by similar actions taken by the other operator, highlighting the damage caused to Georgian consumers. The experts believe that these circumstances will not change without ex-ante regulation, and customers will continue to suffer unless the Commission takes appropriate measures. 

Furthermore, the experts highlighted the ways of solving the existing problems by imposing three different obligations on Magticom. One such obligation is national roaming, which compels an operator with significant market power to allow interested operators who lack the appropriate infrastructure and coverage in certain parts of the country to use its infrastructure for a certain fee. This allows the users of other operators who are unable to receive a signal in some locations due to lack of coverage to automatically switch to the Magti network, as is the case with international roaming. 

The second obligation that the experts believe ought to be imposed on Magticom is co-location, which allows a mobile service provider to place its network infrastructure at the facilities owned by other operators. This allows operators to easily expand their network without large-scale investment and deliver better services to customers. The third obligation recommended by the experts is for Magticom to allow access for mobile virtual network operators (MVNOs) to its network. This will allow companies without their own network to enter the mobile market and start operating without obstacles. 

According to the experts, these obligations will improve competition by giving other operators the opportunity to enter the market without barriers, as well as to improve and refine their services, which will ultimately have a positive effect for the consumers. In addition, the access obligations will become a source of additional income for Magticom, which will ultimately be beneficial for all parties. 

During the meeting, the experts reviewed additional specific obligations that they believe should be imposed on Magticom, such as the duty to publish an invitation offer with detailed technical and commercial terms for more transparency, providing the interested operators information about the terms of access. Furthermore, Magticom must offer all operators non-discriminatory terms with a cost-oriented fee, to ensure that the interested operators will be able to conduct their activities on commercially attractive terms. In addition, Magticom will be required to present a separate breakdown of costs, which will allow the Commission to monitor the operations and ensure that the operator does not force a competitor out of the market through cross-subsidisation, which involves lowering the price of one product at the expense of other services. 

In 2022, ComCom launched a comprehensive telecom market study as part of the EU-funded Association Agreement Facility project. The study involved EU experts and was designed to enhance competition on the Georgian telecom market, provide consumers with diverse and affordable high-quality services, and bring the Georgian regulatory framework closer to the EU framework in accordance with the country’s obligations under the Association Agreement.