Georgian regulator slams Magti over planned mobile data price hike

Georgia’s leading mobile operator MagtiCom has delayed a planned price rise for mobile data after coming under fire from the Georgian National Communications Commission (GNCC), the state telecommunications regulator.

The company announced in early January that they would increase prices for mobile data packages by ₾2–₾5 ($0.80–$2).

Prices for fixed amounts of data on MagtiCom range from ₾3 ($1.2) for 500 MB to ₾30 ($12) for 15 GB. After the price rise, these packages would cost ₾5 and ₾35 ($14) respectively.

MagtiCom justified the move by claiming ‘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’.

The communications giant gave a number of reasons they said contributed to the move, including an increase in fees for laying cables in tunnels in 2017; that rent for leasing state-owned land was ‘much higher than the actual market price’; changes in the exchange rate; inflation; and rising electricity prices.

The GNCC said in a statement on 5 January that the initiative ‘goes beyond the regularity of the market’, and claimed that there were no grounds for such a rise.

‘Extorting subsidies’

According to the GNCC, Caucasus Online, a company owned by MagtiCom who provide them with internet services, halved the wholesale price of internet data that they charge MagtiCom at the beginning of 2018. The GNCC also pointed out that the government taxes for mobile telecommunications service providers was ‘significantly reduced’, and then since 1 January 2018, entirely abolished.

The GNCC also said the authorities take a number of steps in recent years to reduce expenses for mobile companies, aiming to benefit customers.

They speculated that MagtiCom were attempting to extort subsidies from the government, and ‘while increasing tariffs on the above mentioned 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’.

The GNCC said it planned to investigate further, and on 17 January, the commission’s head Kakha Bekauri asked MagtiCom to halt the price rise until they studied ‘the topic of subsidising’.

Later the same day, the company said they ‘took into account’ the request from the GNCC and ‘temporarily suspended tariff changes’ until 1 March.

Last year MagtiCom increased tariffs for all TV packages by ₾2. The company said in November that they were ‘forced’ to do so after six Georgian TV Channels decided to charge cable operators for broadcasting their programmes. Rustavi 2, their two sub-channels Marao and Comedy Channel, Imedi, Maestro, and GDS made the decision in 2017.

MagtiCom, a Limited Liability Company, is owned by two US-based companies, International Telcell Cellular LLC (51%) and Telcell Wireless LLC (49%). It became the biggest player on the market after purchasing the operating assets of Caucasus Online, one of the largest Georgian Internet service providers in the country, and DeltaComm, another service provider.

According to the GNCC’s website, in November 2017, MagtiCom had almost 2 million mobile internet customers. Geocell came in second with around 1.8 million.