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Brosse Street Journal » Business and Economy:

Beeline: Is its Buzz Enough?

By Turan Huseynova
Brosse Street Journal
Thursday, June 21 2007
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Russian mobile phone company VimpelCom Group is making a big play for Georgia. Operating
under the brand name “Beeline”, the Moscow-based company is aggressively advertising – its
clever bee-like black and yellow ads are everywhere – offering dramatically lower prices and
pushing to be number one.
Officially in business since March, Beeline already has more than 15,000 customers and 130
employees, according to company spokeswoman Nina Potrzhebskaya. “We plan to be everywhere at
the end of 2008 in Georgia,” she adds. The company goals: 500,000 customers by 2008 and one million by 2012.
Beeline has bold ambitions in a highly competitive market. Two established competitors with
well-known brands, Geocell and MagtiCom, have nearly two million registered users according
to Gela Butbaia, the director of the department of strategic development at the Georgian
National Commission of Telecommunications.Expansion means not just getting new customers but
taking away those of its competitors. The company’s leader isn’t worried.
“The fact that we are the third operator doesn’t scare us,” declared Roman Kalinin, CEO of
Mobitel Ltd. (the VimpelCom subsidiary that operates Beeline) at a presentation ceremony in
Batumi. “We are prepared to enter the new market later and to be the fourth, even the fifth
operator when we start our activity. However, let me stress that we have very ambitious
VimpelCom is aggressive outside of Georgia as well. As of the end of 2006, the New York
Stock Exchange-listed company had more than 55 million customers, mostly in Russia but also
in countries such as Kazakhstan, Ukraine, and Armenia.
In Georgia, marketing plays a big part of its strategy. Although the company spokeswoman
wouldn’t say how many billboards the company advertises on, the black and yellow ads with
boots, butterflies, binoculars and all those people dressed like bees seem to be everywhere.
Right from the start, the company courted publicity. The first phone with Beeline service
was presented to Tbilisi mayor Gigi Ugulava at the ribbon-cutting ceremony. President
Mikheil Saakashvili got one at a similar ceremony in Batumi.
Offering lower rates than competitors is also key to winning over customers. Until September
15, calls made to and from the Beeline network cost 2 tetri per minute, compared to 28 tetri
for similar style calls with Geocell and MagtiCom’s main services. Calls made to Russia
using Beeline cost 5 tetri less than calls made on either Geocell or MagtiCom. It may seem
like a small difference, but it’s attractive to customers. 31-year-old Maka Chakhaperiya
says she began using Beeline because of these rates to Russia, but will also keep her
MagtiCom number – that is unless Beeline had the same coverage as MagtiCom, she said.
Svetlana Zaqoruchenko, 51, bought Beeline’s plan for her daughter. “She asked me to buy her
a Beeline number because it is cheaper than others,” she said.
Competitors seem to be taking Beeline’s aggressive strategy in stride. MagtiCom spokesman
Zurab Gurgenidze said they also offer low rates of 2 tetri per minute through its newer
service, Bali, which is aimed at the teenage market. (There’s an initial cost of 15 lari to
sign up and you can only call within the Bali network.) Today his company has 55% of the
market (Geocell has 45%) and is present also in conflict zones such as South Ossetia. While
Beeline is a serious rival, he added, "[we can talk] about competition with Beeline after
two years, when they cover all of Georgia…MagtiCom is still a leader, and it will be a
leader in telecommunications.”
Experts believe that no matter which company ultimately wins the most customers, Beeline’s
entrance in Georgia benefits everyone. It puts pressure on companies to offer competitive
prices and better service, said Nodar Khaduri, an economics professor at Tbilisi State
University. “I am a 10-year Geocell subscriber, and during this time this operator didn’t
drop prices, but if Beeline continues to work like this it has a good chance to transfer
customers from other existing operators in Georgia.”
Future plans are equally bold. By the end of September, Beeline plans to have six of its own
stores selling its services, deals with 70 resellers and also have its pre-paid phone cards
available in 2,000 stores. Beeline also plans to introduce a network that is compatible with
the Internet.
“Our main aim is to expand the network, diversify services, and create favorable roaming
conditions,” said Beeline spokeswoman Potrzhebskaya. “Beeline intends to be first in the
Georgian mobile phone market.”

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