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Georgia’s Two Largest ISPs Seek Merger

Georgia’s two leading internet and IPTV service providers, Silknet and Caucasus Online, are seeking merger approval from a regulator.

The Georgian National Communications Commission (GNCC) is expected to decide on launching of the consideration of the request from the two companies at a session on August 11.

GNCC will have three months to assess the impact of the proposed merger before taking final decision.

The companies have declined a request for details of a potential deal; both of them said they would unveil details later.

The two companies dominate Georgia’s broadband internet services with a combined market share of up to 70%.

There were total of about 570,000 internet subscribers (figure includes subscribers for various technologies ranging from fiber-optic and DSL to EVDO and others) in the country with Silknet and Caucasus Online having 40.7% and 27.4% of market share, respectively, as of end-June, 2015, according to GNCC data.

While Caucasus Online has more fiber-optic internet subscribers (153,200 as of June, 2015) than Silknet (86,700), the latter leads in number of DSL subscribers with 141,800. 

When excluding legal entities from DSL and fiber optic internet subscribers and leaving only households, combined market share of the two companies accounted for 77.4% as of June, 2015.
 
With their IPTV services, Silknet and Caucasus Online, held 22.4% and 9.6% of pay-TV market share as of end-May, 2015.  One of Georgia’s largest mobile phone operators, Magti, is leader on the pay-TV market with its direct-to-home satellite service, MagtiSat, with 25.2% market share.

Silknet is part of Silk Road Group, a conglomerate with businesses in transportation, telecommunications, banking, hotels and property development.

Caucasus Online was formed in 2006 as a result of merger of at the time three largest ISPs in Georgia. Caucasus Online, whose shares are now registered on three offshore companies, also owns 1,200 kilometer undersea fiber-optic cable that runs across the Black Sea.

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