Sector Analysis

Main Indicators at a Glance

- Fixed-line telephone density is 12.8 subscribers per 100 people. The disproportion in providing local telecommunications service is large between urban and rural areas. The fixed-line telephone density in urban areas is 23.7 per 100 people while in rural areas 0.76 per 100 people;
- Mobile phone density of cellular radiotelephone network is 12.8 subscribers per 100 people;
- Out of 1,000 people only 9 use Internet. It should be noted that this indicator reflects the situation in Tbilisi and a few relatively large cities. The Internet service is not provided in towns, district centres and villages.
- The main long-distance fibre optic cable covers only 14 cities and regional centres. The share of analogue telephone exchanges in local fixed-line telephone networks is large;
- The public broadcaster's first TV channel covers 90 percent of the country’s population, while the first radio channel –80 percent. It should be noted that technical means applied in TV and radio broadcasting are physically and morally outdated.

Telephony Users

Note: Final figures for 2004 are expected to be released by end November 2005.

Overview

Despite the difficult economic situation in Georgia, foreign investments made it possible to introduce modern communications means and new types of services. For example, in 1992 only 9.8% of local telephone network customers were served through telephone exchanges equipped with new technologies; by January 2005, 54% of 565,000 such customers enjoyed modern systems. Until 1995, the main long-distance cable and radio relay lines were equipped only with analogue system but now the number and length of fiber optic cable and modern digital radio relay lines have dramatically increased. In 1992 there were only two automatic long-distance telephone exchanges; by January 2005, five international automatic telephone exchanges were operating.

Over the past decade cellular radiotelephone networks have grown rapidly and now they cover almost the whole of Georgia (with the number of customers reaching 800,000). The Internet is being introduced on a wide scale as well with more than 100,000 users in the country. It is noteworthy that the private sector played a key role in achieving the abovementioned progress.

A socially-oriented tariff policy made it possible to maintain the general level of telephony in crisis-ridden Georgia but made it impossible to restore broken telephone networks in rural areas, to re-equip telephone exchanges with modern devices at a desirable speed in urban areas and to rehabilitate-develop cable networks. Due to economic and social crisis for many years, a consistent and well-planned technical re-equipment and development of state-owned telecommunications networks did not take place, which resulted in the low growth of telephone density in the country in general. The disproportion between rural and urban areas in providing local telephone communications service has increased. There is a huge difference between the regions by fixed-line telephone density indicators. Only 58 cities and regional centers enjoy automatic long-distance telephone communications.

The energy crisis, persisting for years in the country, has inflicted serious damage on the telecommunications networks. The unstable and low-standard electricity supply causes frequent faults in outdated exchange devices of local telephone networks.

The upward trend observed in the past years on Georgia's telecommunications market continued in 2004 as well and the telecommunications market revenues totaled GEL 572.1 million, (USD 319 million), an USD 81 million increase over 2003. The telecommunications market in 2004 was distributed among the operators in a following way: mobile phone companies held 63% of the market; local operators – 19%; international operators – 8%; Internet service providers – 4% and radio and TV companies – 5%. In 2002-2004, total revenues of local operators increased by 75.59%; international operators by 68.81%; mobile phone operators by 153.44%; Internet providers by 231.08%; radio and TV operators – 184.44%. The postal sector grew the least at 18.32%. The mobile phone segment is characterized by somewhat stable growth (25-30% annually). International operators showed the highest revenues in 2004 (38.64%), while Internet providers - in 2001 (206.75%). In 2001 and 2002, revenues of TV and radio companies dropped (-44.99% and -11.82%), but in 2003 and 2004 increased by 110.56 percent and 53.20 percent respectively.

The telecommunications market, the revenues of the sector and the share of the sector in the country's Gross Domestic Product (GDP) have been growing over the past few years. In particular, the share of communications sector in GDP in 2000 comprised 3.7% while in 2004 it was 6%. There is also an annual increase of investments in the telecommunications sector. Total investments made in the telecommunications sector during 2000-2004 totaled USD 383 million. During the same period, the number of fixed-line telephone network customers increased by 25.5% while that of mobile phone network customers by 441%. Mobile communication systems are currently very important for Georgia since the fixed-line networks in many places (especially in regions) are outdated and a mobile phone represents the only means of communication especially considering that this service covers almost 95% of the country's territory.

Georgian Telecom is the main international and long-distance communications operator and dominates Georgia's telecommunications market. 51% of its shares are owned by the American company Metromedia. The key local telephone network operator is Sakartvelos Electrokavshiri, which is still completely owned by the state. The service provided by Sakartvelos Electrokavshiri through outdated exchanges makes it impossible to fully register traffic. By export assessment, the volume of local traffic in the Sakartvelos Electrokavshiri network exceeds 1.5 billion minutes and it is still impossible today to properly register it and collect corresponding payment. This reserve totals GEL 20 million (USD 11.1) per year. The main operators on the local communications market are Sakartvelos Electrokavshiri and Akhteli Ltd. with 90% of the market. Mobile communications are provided by two key operators Magti GSM and Geocell. There is local as well as foreign capital invested in these companies.

The favorable geopolitical location of Georgia provides the country with an opportunity to become a key telecommunications transit route between Europe and Asia, which is very important for establishing a new, well-developed communications zone in the country. This will, in its turn, greatly contribute to the economic development of the country. At present, Turkey-Iran section is regarded as the main route of the Trans-Europe-Asia telecommunications corridor, while Georgia-Azerbaijani section as a reserve route. For the main telephone traffics between Europe and Asia to pass through the territories of Georgia and Azerbaijan, it is necessary to build lines along Baku-Aktau and Baku-Turkmenbashi sections, Poti-Odessa-Varna and Poti-Rize sections, and to extend the Poti-Kutaisi-Tbilisi cable radio relay line to Baku and Yerevan. The implementation of the mentioned projects requires large capital investments and hence, a joint effort of interested countries.

AmCham and/or EUGBC Members

 UGT
Tel: +995 (32) 22 05 05
Website: http://www.UGT.ge
UGT is one of the leading system integrator and solution provider on the Georgian IT market. UGT primarily concentrates on providing services to corporate clients and the government sector. The core business of UGT is the implementation, deployment, and support of solutions that are based on information and communication technology products and services. UGT is also known for the provision of high quality computer equipment and accessories. Among the partners and suppliers of UGT are world leading IT companies such as Microsoft, SAP, HP, Cisco, IBM, AVAYA, SUN, Oracle and other.

 Ayety Ltd.
Tel: +995 (32) 250 404
Website: http://www.ayety.ge
American-Georgian joint venture "Ayety" is satellite cable TV company, also rendering internet broadband services, operating since 1993. American founder of Ayety - Metromedia Group inc., has invested up to 50 million dollars in the Georgian economy

 Geocell
Tel: +995 (32) 770 100
Website: http://www.geocell.ge/v2/eng/index.php
The first GSM operator in Georgia, Geocell has been operating since March 1997. It now offers almost 80% coverage for Georgia and roaming in 87 countries through 200 operators.

 Magti GSM
Tel: +995 (32) 322 331
Website: http://www.magtigsm.ge
Magti GSM is Georgian/American joint venure between Magti Ltd and Metromedia International Group Inc. Magti GSM is the leading cellular operator in Georgia both by the number of subscribers and the coverage area. More than 95% of the population now has access to its service. Magti GSM started operating in 1997 in the 900 MHz frequency band and was the first company in Georgia to offer the 900/1800 MHz dual-band system. The base stations are provided by Motorola and the switching by Siemens enabling world class network quality and a constant flow of new products and services. From the very beginning Magti GSM has aimed to establish a reliable customer care system through a centralised call centre and a large countrywide network of 23 service branches.

 Metromedia International Group
Tel: +704-3217380
Website: http://www.metromedia-group.com
Metromedia International Group Ltd is the owner and manager of Magticom Ltd, Telecom Georgia and Ayety TV.

 Motorola
Tel: +995 (32) 253 371
Website: http://www.motorola.com
Motorola, Inc. is a global leader in wireless, broadband and automotive communications technologies that help make life smarter, safer, simpler, synchronized and fun. Motorola creates innovative technological solutions that benefit people at home, at work and in the move. The company also is a progressive corporate citizen dedicated to operating ethically, protecting the environment and supporting the communities in which it does business.

 ITDC
Website: http://www.itdc.ge
ITDC is a group of professional programmers, designers, and IT experts. ITDC works on the IT market since 1999 and is specialized on three main sectorss: Development of corporate websites, informational portals and online markets, their hosting, technical support, advancement, and promotion; Development of informational systems and special software products in order to simplify or automatize various business processes; and IT consulting – planning, management, and audition of various types and difficulties of IT projects. Elaboration of IT development strategy formations and recommendations.

 OMG
Tel: (+994 12) 598 8889
OMG International comprises several companies engaged in official wholesale and retail distribution of leading global mobile communication products and services, GSM and DECT devices, mobile content, personal care, professional cosmetics, laundry detergents, and household cleaning consumer product brands in Azerbaijan and Georgia. "Telefon Georgia" is the official distributor of Sony Ericsson mobile phones and has a multi-brand retail network "Telefoni" and an authorized service center "GSM Service" in Tbilisi.