RUSSIAN COMPANIES SET TO BUY ARMENIAN TELECOM MONOPOLY – PAPER

Aykakan Zhamanak, Yerevan
5 Apr 06

Text of Vaagn Akopyan’s report by Armenian newspaper Aykakan Zhamanak
on 5 April headlined “Russians buy ArmenTel”

The owner of 90 per cent of ArmenTel’s shares, OTE (Greece), has
officially announced that it is considering the possibility of
selling its share in the company. You can find this report on OTE’s
website. Moreover, the report names the possible advisor in the deal
– HSBC.

Last time OTE spoke about selling its ArmenTel share was four
years ago. But four years ago ArmenTel was in conflict with the
Armenian government and was in financial difficulties despite being a
monopoly. The company negotiated with several Russian companies but
rejected their offers. Some sources say that at the time Russians
offered as much as 100m dollars, while OTE wanted 200m at least. So,
the negotiations failed, and it seemed OTE had given up the idea of
selling ArmenTel. But now it turns out that its plan was to revive
the company and sell it on better terms.

Sources close to the Armenian government say that this plan may
become a reality very shortly. The point is that a Russian company
is reported to have offered OTE 400m euros. Obviously, this deal is
politically motivated but it is also economically profitable. Last
year ArmenTel made a profit of 119.1m euros. Thus, it is worthwhile
paying 400m euros for the company. Among the potential buyers are
[Russia’s] Beeline and Megafone.

As far as the daily knows, OTE executives visited Armenia some 10
days ago to meet Armenian Transport and Communications Minister
Andranik Manukyan and to tell him, as a representative of the owner
of ArmenTel’s 10-per-cent share, about their plans to sell their
share. The law on joint-stock companies says that if the Armenian
government wants, it can buy the share itself. Manukyan reported
the news to Armenian Prime Minister Andranik Markaryan who called
a cabinet meeting and said that the possible sale of ArmenTel to a
Russian company was bad. In fact, ArmenTel is even more important
than the power grid. If it also goes to a Russian company, Russia
will get full control over Armenia’s economy. Markaryan said that the
deal could not be prevented, but in fact, this can be done. Simply,
if Armenia does so, it will have political problems with Russia.

Legally the deal can become a possibility only if Armenia gives its
written consent to it. If the government decides that the deal is
against Armenia’s interests, it can block the deal. But as you may
know well, this is impossible, for the incumbent Armenian authorities
will hardly dare to openly oppose Russia.