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The Court considers claim of Bakcell Ltd LLC against Azercell

03 August 2011 08:41 (UTC +04:00)

It constantly innovates to reduce cost and passes this cost saving on to customers in the form of lower prices. However the current interconnection tariff, which is much higher than required by the MCIT, limits Bakcellâ€™s ability to reduce prices for its customers and causes an adverse effect on the whole market.

Since the original decision by the Ministry of Communications and IT in April 2009 Bakcell has strived to introduce the 2 qepiks interconnect rate, which would have led to a rapid reduction in retail tariffs for end-user customers. However, Azercell has refused to cooperate and comply with the Ministryâ€™s requirement. Thus, Azercell maintained very high retail tariffs for customers until recently, when the market pressure, driven by Bakcell, to reduce retail tariffs has become so great that Azercell has been forced to lower tariffs for customers.

Azercell’s refusal to implement the MCIT decision for the past two years, during which Azercell has charged abnormally high prices to its customers, caused Bakcell to launch legal proceedings on behalf of all mobile customers to get interconnect costs reduced thereby creating the ability for retail prices to be reduced.

On July 26 2011, Baku city Administrative-Economic court No 1 considered the case and satisfied Bakcellâ€™s claim. The Court order states that the interconnection tariff between Azercell and Bakcell shall be set at the level of 2 qepiks per minute as of April 2009, and Azercell shall pay Bakcell the accumulated debt.

"The mobile telecoms industry is facing a similar threat to the continued development of a truly competitive industry" said Richard Shearer, CEO Bakcell. â€œFirst, Azercell ignores the Ministry and chooses to charge other operators a high interconnect rate to limit competition, if now the operators fail to commit to a timeframe for implementation of Mobile Number Portability this will further limit customer choice. Bakcell is fully committed to the need for Mobile Number Portability and would like to see it introduced to the market at the earliest possible date. We call on the other operators to agree with the MCIT and implement Mobile Number Portability as soon as possible."

Bakcell aims to continue providing the best value mobile communications services for Azerbaijani customers and fully supports the MCIT efforts to introduce Mobile Number Portability to improve customer choice and value.

Note that, the mobile operators pay each other a fixed tariff per minute for off-net calls, which is called interconnection tariff. In April 2009, the Ministry of Communications and Information Technologies of the Republic of Azerbaijan (MCIT) has set new interconnection tariff for GSM operators at the level of 0.02 AZN per minute. Bakcell proposed Azercell to reduce the existing interconnection tariff to the required level, but Azercell refused to comply with the requirement and stated to be satisfied with the current tariff (0,05 AZN per minute), calling the other sideâ€™s claim to be unreasonable.