“The fixed fibre-optic broadband service market in Georgia is uncompetitive and non-dynamic, which is restrictive and damaging for the consumers.” These are the findings of the EU experts who took part in the comprehensive study commissioned by ComCom. The experts deemed Magticom to be an operator with significant market power and identified specific obligations that they believe will overcome the challenges of competition and enable Georgian consumers to have access to diverse and favourable terms like their European counterparts. 

The restrictive conditions are reflected in 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. For example, a 100 MB/sec internet package costs 136% more on average in Georgia than in Europe. As a result, only 1% of Georgian households use internet speeds of 100 MB/sec or above, compared to 55% in Europe. 

“Until the prices for high-volume and high-speed services in Georgia are lowered, subscribers will be forced to use restrictive low-volume and low-speed services, or to pay premium prices for higher speed and volume,” the price analysis concludes. 

It is also important to note that the EBITDA margin (earnings before interest and tax, depreciation and amortisation) posted by the Georgian operators in 2022 significantly exceeded the European average of 35%. Magticom’s EBITDA margin was 75% - more than twice the European average. 

All the aforementioned challenges point towards the existence of a restrictive and uncompetitive environment on the Georgian fixed broadband market, which the experts believe can be improved by imposing appropriate obligations on the operator with significant market power. According to them, ex-ante regulation will remove market entry barriers and improve the market dynamics and competition, which will ultimately have a positive effect on the customers in the shape of lower prices and broader choices. 

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).