The FINANCIAL — After strengthening its leading position in the Georgian market as a successful Georgian mobile operator, MagtiCom sees its future overseas. Moreover, having acquired the WiMax licence, the mobile operator is determined to enter the internet market. The FINANCIAL interviewed David Lee, General Director of MagtiCom regarding the company’s plans both in terms of local and foreign markets and Magti’s new image as that of an internet provider.
Q. MagtiCom participated in the recently held AGBDC business forum. Did you consider the U.S investors as potential clients or are you just interested in attracting additional investments for MagtiCom?
A. Why were we presented at the U.S business forum? Because Magti is the biggest telephone company in Georgia. It’s in our interest to make sure that the economy of Georgia is growing.
In particular, if you consider a foreign investor’s coming, we win no matter what as first of all we get a new client. The investor will then employ people and those people will also become our clients. MagtiCom wants Georgia to do well, because when Georgia does well, MagtiCom does well.
I’m a member of the American Chamber of Commerce (AmCham) in Georgia; I’m an elected director of the board of directors. The AGBDC forum was supported by AmCham and naturally MagtiCom was happy to participate in it.
MagtiCom is the largest taxpayer in Georgia. We take our responsibilies to Georgia seriously.
Q. What are the opportunities that the recently won WiMax license offers MagtiCom for further strengthening its leadership positions in the market?
We’re on top of the game with mobiles! We’re on a world-class level and the next challenge for Magti is to be just as successful in the internet space. We’re developing in the same way as the U.S does by launching WiMax. We’re talking to Ciso, we’re talking to Motorola, and Siemens and we’ll do it fast and well. MagtiCom is using fibre optics and other networking technologies.
One of the biggest news events about MagtiCom was the GGN project. MagtiCom was selected to connect all government offices in the country together.
MagtiCom has received a WiMax license and that’s actually the breaking news that will allow us to roll on in a very MagtiCom way – high-speed access over WiMax to a very wide area. In the future we see MagtiCom providing people not only with mobile services but with fixed services and internet in the offices and their homes as well. That’s the area where we see a huge opportunity to get the latest technologies not just in several cities but throughout the whole of Georgia. It’s a place where we can get a lot of customers. We’re getting ready to enter the mass market.
The first step is to connect the government and businesses to the internet wherever they are, and the next step- every single person in the country who can afford a computer must have access to the internet as well.
As for the price of the WiMax license, it was cheaper than that of 3G, but we intend to invest a lot and roll it out widely.
We have over a hundred thousand 3G users now. Even in the villages you come across 3G phones in the hands of men riding horseback. There’s really something about Georgian nature that increases the appreciation of high tech.
Q. You delivered an interesting review of local communications, how promising does it appear for U.S investors to take advantage of?
A. I think in Georgia today the one market we have that is of truly world class standards already is the mobile telecommunications market. You’ve got three companies competing, two multinationals and Magti.
Magti is bigger than Geocell, though it doesn’t mean that we’re huge and they’re tiny. Geocell is also a very good company.
The second thing is the very latest technologies. Magti was the first to introduce 3G last year and it was the very first time that 3G was really used in this part of the world. If you look at our neighbours to the north or in Turkey – they do not have 3G, even these much bigger countries don’t have 3G yet.
When you look at the rest of the telecommunications industry, the picture’s not quite as good. In fixed lines, there are much less landline telephones, probably there are five times more mobile phones than fixed ones. That is not correct as there should be more fixed telephones in the country. I’m sure that foreign companies are looking at that part of the market.
What’s probably worst of all is the internet market, where there is no competition as there’s just one huge company which I think is unhealthy for the country.
What do I think foreign investors will look at? They will see a highly competitive and developed mobile market and an under-developed fixed and internet mrket.
I think lots of companies will look at the content market, people doing music videos, ring tones, games, and I’m sure they’ll all get interested in launching a special mobile game portal.
For all the U.S investors who participated in the forum they now know that what they’ll never have problems with in Georgia, is mobile connection.
Q. “You can get better and higher quality services with MagtiCom in Georgia than with any prominent international mobile operator in New York, Paris or London,” quoting your words, what were your arguments for this statement?
A. You can! There’s no question about it. MagtiCom has better coverage and our quality’s higher. That’s partly because in Georgia there are less people and it’s also because we have three operators for around 4.5 million people whereas in London they have 5. So, in proportion this market is one of the most competitive in the world. 4.5 million people and three mobile operators – it’s a hot market and that’s why you see this continual network development, innovation and customer-focus from MagtiCom – these are the three things we are continuously doing in a cycle of continuous improvement.
If you ask Georgians what they want? The answer is – the latest technologies for a good price and in a Georgian way. So Magti’s got a winning formula for them: the latest technologies, innovation and customer focus.
Q. What’s the number of MagtiCom’s individual U.S or corporate clients? Which U.S brands in Georgia are your clients?
A. The U.S embassy is one of our corporate clients. As for commercial companies, most of them are MagtiCom subscribers though it’s confidential.
It’s not because they’re Americans, it’s mostly because they believe MagtiCom has the best conditions to offer.
Q. Currently the local market of mobile operators is almost equally controlled by MagtiCom (53%) and Geocell (47%), how do you evaluate the potential of the newly-entered Beeline and what’s MagtiCom’s strategy in terms of keeping on fighting for the market leadership in the future?
A. I think that Beeline’s entrance on the Georgian market is a good thing. MagtiCom’s been competing on the market all its life, I like competition.
A good example is football, the great European teams like AC Milan where Kakha Kaladze plays, they’re great because they always have good competition. What will we do now that Beeline has added competition to the market? We’ll do the same that we’ve being doing in the past: make sure that our network is the best network with the highest quality, by keeping on innovating, bringing out new services and keeping focused on the Georgian market.
One of the reasons why MagtiCom is successful is because of the 9 hundred Georgians working here. They understand that this market is their home. We know what Georgian people want! So far we’ve given them what they want: the latest technologies, the quality and all for a good price. I always wonder how despite all the economic difficulties, you find that Georgians have always appreciated quality. The same is true with cars, most Georgians would prefer to have a good German car than a cheap Russian one, and that’s interesting, that’s a national characteristic.
I think it’s also reflected in Georgian culture. As a foreigner who’s been in Georgia for four years, I would say that Georgian food is excellent, it’s not just good, it’s excellent! Georgian wine is excellent! People say Georgia’s still developing economically and it is, but some things here are already world class like music, dancing and the culture of Georgia. Georgian culture is not a copy of someone else’s culture, it’s purely Georgian.
We’re very proud of our Bali Guy here! Young people now use Bali because it’s good value and great fun and it’s Georgian. Magti didn’t take Mickey Mouse from America though we could have done that, I guess, taken a license and done something American here, but we didn’t. We made a Georgian Mickey Mouse, something that Georgian kids would identify with, something that is very close to Georgian souls, Georgian entities. The Bali Guy is created by Georgians, marketed by Georgians and used by Georgians! That’s the MagtiCom philosophy.
When we talk about where we see our future, we see our future overseas. I believe that what MagtiCom does could be attractive not just for Georgians but for people from outside of Georgia. The same goes for Georgian wines and Borjomi mineral water which people drink all around the world. What MagtiCom does today is new, innovative and state-of-the-art.
Why wouldn’t somebody in a neighbouring country get interested in the concept of Bali, why wouldn’t someone overseas want the same services that you’ve got here, I’m sure they would. So I don’t see any limitations about markets right now and in terms of investors in Georgia, we’re happy to support the government and the U.S embassy in attracting capital from abroad.
I strongly believe that what we do in Georgia we could do in other countries as well though first we have to finish the job here.
Q. Advertising is a consistent element and an ultimate success condition for any business in any country worldwide. Kakha Kaladze, a Georgian football celebrity is the exclusive face of MagtiCom. What links do you see between the personality of the FC Milan Defender and your company that would best promote MagtiCom?
A. The main reason for choosing Kakha is that he represents a lot of the values that Magti stands for. Kaladze is a Georgian who operates on a world-class level, he’s a living example that the things in Georgia can be popular abroad. I’ve always benchmarked myself against the best in of the world. Magti brought 3G and Wimax to Georgia because that’s what’s happening in the best markets worldwide.
I don’t see any reason why Georgians should not have a mobile phone. We can find a way to give the best offers possible to people of any age regardless of their income. Magti is motivated to contribute to the development of Georgia’s economy, as we can’t depend on any other country’s economy.
Kakha is a nice human being, he’s a super face for Magti, he’s smart, sexy and he’s Georgian. Kaladze’s been incredibly successful in his life despite the huge problems he has had to face. Recently he donated money to orphans in Samtredia, his hometown. It’s amazing that a guy with that world-class reputation finds time to go and play football with kids and never forgets that he’s Georgian first and foremost wherever he lives or whoever he’s playing for. That kind of personality is an honour for Magti to be associated with!
Q. CSR has become a part of business for companies worldwide. What’s CSR for MagtiCom?
A. I think that CSR in Georgia is like the country’s economy, it’s developing. MagtiCom has always been contributing to arts, to charities. But we’ve done it, to be honest, in a slightly unstructured way. We did what we though was needed at the time. Now we’re trying to develop a more structured and focused approach, maybe in conjunction with some of our big partners.
I think that all companies in Georgia are starting to understand right now that we play a role in society and we have to do it in a visible way and not in a quiet way. What Magti does in terms of CSR is also that we employ a lot of people and we’re the largest taxpayer in the country, Magti’s given over GEL 600 million in taxes so far. It’s also a contribution to society, we’re a big employer, and we’re happy to be known as a company with a lot of people.
One of the particular focuses we’re very keen to contribute to is education. I and all of our shareholders, we’re all family men and in a place like Georgia you realize that the future is probably going to be all about the next generation. Those who are going to come of age learning about the internet, languages and having a completely different focus to previous generations. The youth are not now looking north, they’re looking all over the places but they remain independent. As a company involved in high-tech, we’ll keep on making contributions to education in Georgia.
Q. As Salford Georgia officials stated the main target for the company while acquiring Metromedia MIG stakes was MagtiCom, are there any radical changes expected about your company in the future?
A. Nothing at all has changed since then. In terms of the way MagtiCom is run, I think we’re one of the best companies in this part of the world. I’m pretty sure that if you ask MagtiCom employees they wouldn’t have even noticed the change of shareholders unless they read about it in the press.
MagtiCom continues to carry on its objective of being the best, the biggest and the most profitable telecommunications company in Georgia. So I see no reason to change the focus.
Q. Bali Card is a new project being offered by MagtiCom and Bank of Georgia. The new program allows members of the Bali Student Club to enjoy discounts in various trade centres of Tbilisi, hospitals and beauty centres. The owners of the card will also have a 25% discount in subway stations. How successful do you expect the co-branded transportation cards to be? Are there any cooperation plans about buses as well? Airlines?
A. We see Bali Card as a very successful product of the future, it’s not only a debit card or a kind of card, it actually has near limitless capabilities.
We’re much delighted with the partnership with Bank of Georgia (BoG). The bank has developed a clear customer-focused innovative vision. The future of mobile telephones is in many ways tied to the banking sector. Not many countries have the cash transfer system that Magti offers, we’re always ahead of time, though there’s a lot more to do in the future. I see this contactless Bali Card being a useful means for various payments in the future.
Q. In July 2007 MagtiCom opened a WiFi zone in Batumi Boulevard, how big is the demand on WiFi services in Batumi or was it the summer season only? Do you have plans for other locations as well?
A. We’re going to do just the same in the central Square in Tbilisi so that the Mayor’s Office can enjoy WiFi access to the internet. And we’ll do it outside Tbilisi as well.
Maybe there are some people who don’t think it necessary to bring all the latest technologies to Georgian villages, however Magti is the market leader and that’s what we’re going to do in the future.
MagtiCom is not about taking cheap technologies and making them work. We’re about taking the best technologies and trying to create a business market that’s affordable for everybody. It works! 3G is a great example of it!
Georgia is special and it shouldn’t limit itself. Maybe there’s only one disadvantage and that is that it is a small market, after all Georgia’s not a big country. Although when we have developed both world class mobile and internet here we can go overseas with our network as well!
Written by Kate Tabatadze
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