Executive summary

As Georgia worked to rebuild both its economy and its society after the collapse of the Soviet Union, the appalling state of its telecommunications infrastructure hindered the rebuilding process. Post-communism, the much needed upgrades and development of the state-owned telecom networks did not take place, keeping telephone penetration low for a decade or so.

As the overall Georgian economy became healthier, not surprisingly, so too did the country's telecom sector. With rising telecom revenues, there was a corresponding and significant increase in investment in infrastructure.
Notably, the share of telecommunications in the country's GDP had reached 6.1% by 2005, this compared with 3.7% in 2000. Between 2000 and 2004, total investments in the telecom sector amounted to approximately US$383 million.
The mobile segment of the market in particular was booming. In the five years to March 2009, mobile penetration in the country had increased more than sixfold to reach 83%. MagtiCom was awarded Georgia's first 3G licence in 2005. Then, in a significant move in 2006, the regulator awarded another 3G licence, followed by a third later in the same year.

The year 2003 proved to be a political turning point for Georgia with the so-called Rose Revolution seeing a reforming administration take control of government; at the same time, the influence of the telecom sector on the potential development of the country's other economic sectors was starting to increase dramatically. Since 2003, telecommunications has become one of the fastest growing sectors in the Georgian economy.

In its annual report published in July 2008 the Georgian National Communications Commission (GNCC), the country's telecom regulator, noted that sales in the country's electronic communications market (telecoms, TV and radio) had reached GEL1.1 billion (US$784 million) in 2007, up 10% year-on-year. The sector accounted for 6.6% of Georgia's total GDP, down from 7.5% in 2006. Mobile operators earned 63.3% of overall telecom service revenues, ahead of fixed-line operators with 29.5% and TV and radio broadcasters with 7.2%.
This had been the pattern for some time. In 2004, the telecom market share had been dominated by the mobile operators (63%), followed by local operators (19%), international operators (8%), radio and TV companies (5%) and Internet service providers (4%). Between 2002 and 2004, total revenues of local operators increased by 75.6%; international operators by 68.8%; mobile phone operators by 153.4%; Internet providers by 231.1% and radio and TV operators 84.4%.

Mobile communication systems have become increasingly important for Georgia since the fixed-line networks in many places (particularly in rural and remote areas) remained outdated and a mobile phone represented the only means of communication, especially as mobile coverage has been provided for virtually the whole of Georgia.

The Internet segment of the market continues to lag the wider development of the country, with user penetration still below 10% by early 2009, according to the ITU figures. At the same time, broadband Internet penetration was sitting somewhere below 2% and the uptake of broadband services also remained slow.
Positive regulatory developments in the country have included the establishment of an independent regulator for the telecom sector in 2000 and the ongoing privatisation of fixed-line operators, Sakartvelos Telekomi and Sakartvelos Elektrokavshiri. Competition had arrived for all segments of the telecoms market, including fixed-line voice services. Georgia had more than 270 licensed and operational service providers and network operators.

Key highlights:

By March 2009 mobile penetration in Georgia had reached 83%, having increased more than sixfold over the previous 5 years;
Despite a faltering economy, the mobile market was continuing to grow at an annual rate in excess of 20%;
Georgia's telecom regulator having awarded three 3G mobile licences, by early 2009 operators Geocell and MagtiCom were claiming a total of 600,000 3G subscribers between them;
In other words, 3G subscribers were already comprising 17% of the total mobile subscriber base;
The development of the fixed-line network in Georgia has effectively stalled, with zero growth and a system that is still well short of 100% digital target (only 62% digital in 2007);
The Internet segment of the Georgian market also continues to lag, with user penetration below 10% by early 2009;
Broadband Internet development has been particularly slow with penetration sitting somewhere below 2% for the time being;
Georgia's ongoing tension with its neighbour Russia is providing considerable uncertainty for the country and its future direction of its development;
The World Bank ranked Georgia as the 15th easiest economy in the world in which to do business, up from 21st in 2008.Georgia-key telecom parameters-2008 - 2009
Category20082009 (e)
Fixed-line services:
Total number of subscribers556,000560,000
Annual growth0%0%
Fixed-line penetration (population)13%13%
Internet:
Total number of subscribers85,00095,000
Annual growth13%12%
Internet subscriber penetration (population)2.0%2.2%
Mobile services:
Total number of subscribers (million)3.35 4.0
Annual growth36%19%
Mobile penetration (population)77%90%

This report provides an overview of the trends and developments in the telecommunications markets in Georgia. Subjects covered include:

Key Statistics;
Market and Industry Overviews;
Major Operators (Mobile and Fixed)
Regulatory Environment;
Infrastructure;
Mobile Market;
Internet Market, including Broadband;
Telecom market subscriber forecasts for selective years to 2018.

Table of Contents

1. Executive summary
2. Key statistics
2.1 Country overview
3. Telecommunications market
3.1 Overview of Georgia's telecom market
4. Regulatory environment
4.1 Regulatory authority
4.1.1 The Georgian National Communications Commission (GNCC)
4.2 Privatisation
5. Fixed network operators in Georgia
5.1 United Telecom (formerly Sakartvelos Elektrokavshiri)
5.2 NewNet Telecommunications (Akhali Kselebi Ltd)
5.3 Telecom Georgia (Sakartvelos Telekomi)
5.4 Egrisi
6. Telecommunications infrastructure
6.1 National telecom network
6.1.1 Wireless Local Loop (WLL)
6.2 International infrastructure
7. Internet market
7.1 Overview
7.1.1 Internet statistics
7.2 August 2008 conflict and possible cyber warfare
7.3 ISP market
7.3.1 Georgia Online
7.3.2 SaNet
8. Broadband market
8.1 Overview
8.1.1 Broadband statistics
8.2 WiMAX
9. Mobile communications
9.1 Overview of Georgia's mobile market
9.1.1 Mobile statistics
9.1.2 Impact of the conflict with Russia
9.2 Regulatory issues
9.2.1 Third Generation (3G) mobile
9.2.2 Spectrum auctions
9.3 Major mobile operators
9.3.1 Geocell
9.3.2 MagtiCom
9.3.3 Mobitel
10. Forecasts
10.1 Overview
10.2 Forecasts-fixed-line market-2007-2008; 2013; 2018
10.3 Forecasts-Internet services-2007-2008; 2013; 2018
10.4 Forecasts-mobile market-2013; 2018
10.5 Notes on forecasting
11. Related reports
Table 1-Country statistics Georgia-2009
Table 2-Telecom revenue and investment statistics-2007
Table 3-Telephone network statistics-2008
Table 4-Internet user statistics-2008
Table 5-Mobile statistics-March 2009
Table 6-National telecommunications authority
Table 7-Fixed lines in service and teledensity-1995-2008
Table 8-Fixed-line operators-subscribers and market share-May 2008
Table 9-Internet users and penetration rate-1996-2008
Table 10-Internet subscribers-2001-2008
Table 11-Broadband subscribers-2001-2008
Table 12-Mobile subscribers and penetration rate-1995-2009
Table 13-Mobile operators, subscribers and annual change-March 2009
Table 14-Mobile operators-subscribers and market share-March 2009
Table 15-Forecast fixed line subscribers-2007-2008; 2013; 2018
Table 16-Forecast Internet subscribers-2007-2008; 2013; 2018
Table 17-Forecast mobile subscribers-2007-2008; 2013; 2018
Exhibit 1-United Telecom's Tbilisi network infrastructure