Important aspects of enhancing profitability of Georgian mobile operators

Abstract

Aim of this article is to research and analyze of profitability of leading Georgian telecommunications companies and prepare respective conclusions and recommendations based on given research. Subject of this research is profitability indicators of analytical enterprises. Object of this research is leading Georgian telecommunications companies. Based on performed research tendency of companies’ profitability changes and respective influencing factors are demonstrated and based on given analysis further profitability improvement and stability measures are stated. Based on performed research and analysis, we identified, that during pre-pandemic period profitability of JSC “Silknet” and LLC “Vioni Georgia” was higher, than post pandemic period profitability, when most indicators of companies’ profitability deteriorated, including gross profit margin and operating profit margin. Profitability is always depending on several variables and covariation between them. Performed research resulted with following conclusions: Profitability is variable during the analytical period, companies sometimes suffer with loss, JSC “Silknet” and LTD “Vioni Georgia” do not have financial independence. Regarding LLC “Magticom”, its profitability during analytical period has improved significantly, which is caused due to correct cost management. To improve profitability, following recommendations were established: • It is necessary to note, that loss-making companies are suffering from high finance costs and foreign exchange losses. Therefore, it is vital, that companies implement methods of optimization of given expenses or seek alternative and less expensive source of financing. • Regarding operating expenses, companies should seek more efficient methods of management operating expenses. This will give companies more flexibility and additional opportunity to invest free cash flows more profitably. • As a conclusion, it is necessary to say, that companies should use multifactorial model, when assessing profitability of enterprise. I our case, model consists of eight variables, which reviews all aspects of enterprise profitability.