The FINANCIAL — Iago Khachvani, Service Director of Caucasus Online, talked about the Corporate Social Responsibility of the company and underlined the priorities which could encourage the development of the company.
Georgian internet service and long distance communication provider Caucasus Online has so far invested USD 40 million in a fibre optic link between Western Europe and the Caspian region crossing Bulgaria.
Recently Caucasus Online had to survive two battles; one during the Russo-Georgian war and the other, during the ‘war’ with competitors. The company took responsibility for fulfilling all the rules of the Black Sea project’s environmental impact, which are written by the European Bank for Reconstruction and Development (EBRD).
A USD 35 million financing package composed of a senior secured debt and an equity investment in 5% share capital of Caucasus Online was funded by EBRD.
Iago Khachvani, Service Director of Caucasus Online, talked about the Corporate Social Responsibility of the company and underlined the priorities which could encourage the development of the company.
Q. Caucasus Online is major internet provider in Georgia. More than a hundred thousand people use it every day. Recently the internet has become a source of income for a lot of people. How hard is it taking responsibility for your customers?
A. We realize the responsibility we have. Caucasus Online serves about 50,000 clients and this is 80,000 families. Our main goal has always been hard work to improve technical service.
Q. Among the loyal users of Caucasus Online are leading Georgian companies and governmental structures. None of them faced a problem of internet restriction even during the hardest period of the Russo-Georgian conflict. Can you remember what kinds of difficulties you faced during the force majeur situation last August and how you overcame them?
A. The first thing we found out during the force majeur situation was that Georgian servers were the focus of our enemy. People from foreign countries could not use our network. Assault of our service lasted throughout the whole period. It was an unexpected attack which taught us many things. The scale of attack was so huge that it was hard to prevent it. But on the other hand, it was a good lesson and taught us many things.
Q. Cyber Insurance is becoming more acceptable in the world. Lots of countries have created special departments and units for it. How protected is the Georgian internet from Cyber attacks? And what kinds of works are being done for its prevention?
A. Despite the fact that the internet system is fast developing in our region, Cyber prevention insurance is not very popular in Georgia. The ways of avoiding it are not concretely written. But we are doing everything not to turn away from the world’s tendencies so as to minimize our risks.
Q. Is the Georgian Communication system, internet and phone network independent from Russia?
A. I’ll explain the example of the internet. Before making the Black Sea pipeline we received internet through Russian and Turkish channels. The Turkish channel was small according to its parameters. And the Russian channel meant that we did not have any guaranty; so we could have been switched off at any time. Fibre-optic internet was available only from Russia. After completing the Black Sea project we became independent from Russia and directly switched to Europe as our source of internet.
Q. What kind of Corporate Social Responsibility (CSR) directions can be most stable and long term in Georgia in their results?
A. All the companies are socially responsible and it’s good to follow international rules. But Caucasus Online’s responsibility is providing customers with informational demands. Actually development of the internet gives different perspectives. The internet creates an intellectual environment which is also very important.
Q. One of the main demands of EBRD while financing the project of Caucasus Online’s was following up international standards, such as: the environment, healthcare, safety and working principles. Among the other demands of EBRD is also creating an annual report of the environment. Tell us in detail, what kind of reporting does it include?
A. Negotiations are not yet finished. But Caucasus Online will complete all of the demands. According to the agreement: An Environmental Action Plan (EAP) should be developed and agreed for the project. The project will be required to comply with national and EU environmental, health and safety standards and requirements, implement an EAP and submit an Annual Environmental Report to the Bank. The Bank will monitor the project’s environmental performance during the life of the project through a review of the Annual Environmental Report as well as a monitoring visit where necessary and adequate.
Q. Caucasus Online started becoming stronger when other leading providers became present on the market. Among them was Sannet, Georgia Online. Estimating the situation today, what can you say, was it a good decision joining other companies with Caucasus?
A. Maybe at first you could doubt taking such a serious step because we did not have any guarantee of its success beforehand. But now we can say that it was a right step. This union strengthened us and helped us to start the Black Sea project and attract EBRD’s interest.
Q. Next to development your company has gathered competitors. An argument with United Georgian Telecom is still ongoing. We also often hear customers’ complaints about disconnection of the internet. How long will this argument last?
A. This disagreement alternately calms down and blows up and from time to time. We hope to see the end of this fight soon but the only thing I would like to say is that competition must not become a fight without rules. Everything has its form.
Q. New networks offer a wide range of abilities to your company and customers. Can this influence prices? What’s the amount of self cost and the selling price of the internet?
A. Recently we offered a new price packet to our customers. The cost is EUR 7. The main goal of low priced packets is making internet available to everyone. We are oriented at providing the whole country with internet. The sales prices of internet packages do not much differ from its prime cost. For example, the real worth of the 7 EUR packet is EUR 6.
Q. What kind of changes can we expect in the direction of customer’s service development?
A. To tell the truth, it’s not easy to care for customer service during a private war with competitors. But we are still trying to develop our services. Today we offer our customers all kinds of operations, be it payment, installation or others, without having to leave their base (home/office). We have a 24 hour service centre. And our engineers are obliged to resolve every query of our customers.
Q. How has the backdrop of the global financial crisis and August’s events affected the company?
A. The world financial crisis did not influence us. For Caucasus Online the local ‘fight’ with competitors has had the hardest impact. It was hard to retain the trust of our customers after our service was disrupted. Understandably they felt uncared for and of course when you need a product and are paying for it then you don’t expect there to be any untoward complications. However at that time we could not satisfy their demands.
Q. Many companies have had to reduce their staff number because of the general circumstances in the country. What is the situation like at Caucasus Online in this regard?
A. We aren’t planning any staff reduction at Caucasus Online. Our staff politic was always thrifty. We never had more staff than needed. The current crisis shows that that was right. There is constant circulation of our staff. Someone comes and someone leaves. As opposed to staff reductions we actually plan to announce vacancies for engineers’ positions.
Q. Are your staff trained locally, do you have any training specifications or requirements?
A. We have a tradition of hiring staff from Georgian State and Technical Universities. They must pass several steps; interview, probation and collaboration. We have inside trainings to increase the qualifications of the staff. Service and marketing employees are always going to trainings and seminars to improve their skills. And of course, the Black Sea project needed people with different qualifications from the ones our staff have, so they were sent to the USA and Great Britain and also foreign specialists came to train our staff here.
Q. Are you planning to reduce the budget for salaries?
A. We are not going to reduce anyone’s salary.
Q. Have you reduced expenses for corporate events of 2009?
A. Our expenses for corporate events have always been relatively low. The scales were never large.
Q. Currently due to the global financial crisis financial organizations are trying to overview the main demands of the private sector. And the satisfaction of listed demands must encourage the stability and development of business. Can you tell us of your priorities?
A. Financial investments in the company are very important. But our priorities are not only stable financial law, but also the means of its execution.
Q. As we know, the fibre optic cable will provide Azerbaijan and Armenia by passing through Georgia. Tell us about your partnership with Georgia’s neighbour countries and the financial details of this agreement.
A. We are in the process of negotiations with our neighbour countries. They are not yet over. But we will be happy to provide the whole of the Caucasus region with internet.
Q. What kind of challenges do you expect for 2009?
A. We will be focused at increasing the number of our customers. We are oriented at providing the whole of the country with internet and also providing our neighbouring countries: Azerbaijan and Armenia. The Black Sea project offers large possibilities.
Written By Madona Gasanova
