The FINANCIAL — The number of Georgian smartphone users is rising every year. Meanwhile the free of charge services of these new technologies have not had any impact on the revenues of mobile operators. Companies are planning to invest millions in establishing 4G technologies in Georgia. The service will become available on the Georgian market from spring 2015. Besides solid expenditure by companies, new global research on LTE usage demonstrates 4G’s positive impact on mobile operators’ business.
According to the Georgian National Communication Commission (GNCC), total profit of mobile operators in Georgia amounted to GEL 418,431,317 during the first eleven months of 2014, up from GEL 416,517,972 from the prior-year period.
Magticom leads the list of the most profitable mobile companies established in Georgia. The company attracted GEL 174,865,271 in January-November 2014. Magticom increased its revenue by GEL 2.4 million in comparison with 2013. The retail revenue of Magticom was GEL 172,449,506 during 2013.
With GEL 160,059,671 Geocell is the second most profitable mobile operator in Georgia. Like Magticom, Geocell increased its revenue in 2014 compared to the previous year’s figure of GEL 154,583,552.
The retail revenue of Mobitel amounted to GEL 81,535,296 in 2014. Contrary to Magticom and Geocell the company saw a reduction of profit in comparison with 2013. The revenue of Mobitel in 2013 was GEL 87,146,020.
The retail profit of Silknet amounted to GEL 1,971,077 last year down from the GEL 2,338,894 of 2013.
The number of subscribers totalled 4,650,938 as of November 2014. The figure was 4,372,330 in November 2013.
Mobitel, the operator of Beeline in Georgia, spent GEL 51 million on purchasing a license for 4G technology.
“Development in telecommunications is going much faster, to make sure that customers consume more. Now people want 4G on their mobiles. That means that they want to see live television. However, the cost should be reasonable. People will not be able to pay too much money for that. Those two worlds should come together. We are trying to bring down the prices so that this can be delivered to customers. There is a problem in the fact that the life expectancy of technologies is getting shorter and shorter. For instance, we had GSM, then 2G, 3G, and now we are getting 4G. All those technologies have not had enough time to recoup the investments. For example, in 3G you need another 5 years of life to make sure that all the investments are paid back. So that means that there is a new need also in telecom regarding financing. The telephone cost itself cannot finance all those new technologies continuously. So they have to look for external sources, investors, who will help them to do that. This is the new world,” Sietse Lettinga, International Sales Director at Azertelecom, told The FINANCIAL.
Like Lettinga, Matthias Hartmann, Managing Director at NewTelco, also agrees that against a background of required investments, the recoup in the telecommunications sector is becoming lower.
“In the West we hear a lot about how wireless connections, the internet, should be for free. As we know, nothing on this planet is for free. Currently every company is fighting for little margins. In such countries as Georgia or South Africa there are still some possibilities for making margins. I find it hard to predict how this trend will end in Europe. For telecommunications, as a carrier today, you have to carry content. It is not a network anymore. Internet calls should be for free. Companies still earn money from roaming. However, the EU is now working on reducing the amount for roaming. So, how should investors earn money? People are investing a lot of money in modern technologies, which is changing. Not long ago everybody was proud to run 3G. Now, everybody has switched to 4G. When we talk about free internet and phone connections, this is the biggest challenge,” said Hartmann.
Contrary to Hartmann and Lettinga, Mobidia Technology, Inc., a leading provider of mobile usage data, a London-based analyst firm, stated in its recent research that 4G will demonstrate a positive impact on mobile operators’ business.
According to the research of Mobidia Technology, across the markets studied, 4G subscribers consumed dramatically larger amounts of data than 3G subscribers. Wi-Fi continues to be a primary means of connectivity for smartphone subscribers, both 3G and 4G. Globally, Wi-Fi usage represented 78 percent of all data consumed on smartphones for all data subscribers in the markets studied.
Despite the growing Wi-Fi usage, 4G subscribers are buying larger plans. In January 2013, 61 percent of 4G smartphone users have plans larger than 1 GB compared with only 31 percent of 3G smartphone users. While the percentage had declined slightly by the end of 2013, the data clearly shows that 4G users are buying and utilizing larger data plans.
More 4G subscribers are exceeding data plan limits relative to 3G subscribers. This trend increased throughout 2013, suggesting users are more likely to upgrade to larger plans – a big benefit to mobile operators.
The global trend of growing mobile internet usage has also been shown in Georgia. Mobile operators have seen an increase of internet subscribers in 2014. The total number of subscribers amounted to 1,154,908 as of November 2014, up from 1,088,802 from the same period of the previous year.
During January-November 2014 outgoing calls from mobile networks comprised 7,897,492,482 million minutes. The traffic was 7,893,119,119 million minutes in January-November 2013, or 4,373,363 minutes more.
There were 5,823,529,369 million SMSs sent during the first eleven months of 2014. This is 731,127,646 more text messages than in 2013.
With 1,743,112 subscribers Magticom is the dominant company on the Georgian market. However, despite its leadership by number of subscribers 2014 brought a reduction as the number amounted to 1,904,517 in November 2013.
Magticom is followed by Geocell, which has 1,711,174 subscribers. Contrary to Magticom, the company managed to attract 194,870 new subscribers in comparison with 2013.
Mobitel had attracted 244,428 new users as of November 2014 when their total number reached 1,167,435.
The number of subscribers of Silknet was 29,217 as of November 2014, up from 28,502 from the same period of the previous year.
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