MagtiCom Delays Planned Rise in Mobile Data Costs

MagtiCom, the leading mobile operator in Georgia, has delayed a planned rise in the cost of mobile data following protests by the Georgian National Communications Commission (GNCC), the state telecommunications regulator.

It was announced earlier this month that the company would be increasing their prices for mobile data tariffs by 2-5 GEL ($0.8-2). Prices for fixed amounts of data on MagtiCom range from 3 GEL ($1.2) for 500 MB to 30 GEL ($12) for 15 GB. After the price rise, these packages would cost 5 GEL and 35 GEL ($14) respectively.

MagtiCom explained their decision by saying, “there are very low tariffs for mobile services in the country today,” and consequently, the company’s mobile internet delivery costs and revenue from services “do not balance each other.”

Other reasons were given for the move, such as funds being needed for laying new cable lines this year; volatility in exchange rates; inflation; a rise in electricity prices; and the cost of leasing state-owned land being higher that the actual market price.

The GNCC made a statement on January 5, saying that such a rise cannot be justified, and the initiative “goes beyond the regularity of the market.”

The GNCC said that Caucasus Online, a MagtiCom-owned company who provide them with internet services, cut the price at which they sell internet by half. It was also pointed out that taxes for mobile telecommunications service providers had been “significantly reduced,” and on January 1 this year, were completely abolished.

The GNCC accused MagtiCom of attempting to export subsidies from the government, and said, “while increasing tariffs on the abovementioned services, MagtiCom may be planning to finance (or maybe is already financing) various services which they are offering to consumers at a lower price than its cost.”

As soon as suspicions were aroused by the GNCC, they said that they would investigate the case further. On January 17, Kakha Bekauri, head of the commission, requested MagtiCom postpone the price hike until “the topic of subsidizing” had been studied. The same day, MagtiCom said they “had taken into account” this request, and “temporarily suspended tariff charges” until March 1 this year.

In 2017, MagtiCom raised tariffs on all their TV packages by 2 GEL. They justified this by saying they were “forced” to after six Georgian TV channels decided to charge service providers for showing their TV programs. Rustavi 2, their two sub-channels Marao and Comedy Channel, Imedi, Maestro, and GDS made the decision in 2017.

In 2017, MagtiCom had 2 million mobile internet customers, according to the GNCC website. Geocell came in second with around 1.8 million.

MagtiCom is a Limited Liability Company and is owned by US-based companies, International Telcell Cellular LLC (51%) and Telcell Wireless LLC (49%). It gained its status as the largest internet service provider after buying the operating assets of Caucasus Online and – two of the biggest service providers in the country.

Tom Day

22 January 2018 18:37