Armenian government ousting Greek telecom giant, favouring Russians –
paper

Aykakan Zhamanak, Yerevan
3 Jun 06

Text of Vaagn Ovakimyan’s report by Armenian newspaper Aykakan
Zhamanak on 3 June headlined “OTE is in a mousetrap”

The pro-government press in Armenia recently disseminated reports on
the inevitable sale of ArmenTel to Russians. Of course, these reports
are based on Russian sources. It is interesting that this stir began
after a newspaper published an article regarding OTE which failed to
agree ArmenTel’s price with potential Russian buyers. This article
caused a stir in certain circles, which is strange enough. These
circles are saying that the future owner of ArmenTel will be a Russian
company.

It should be mentioned that Russia’s Sistema Telecom, which is part of
the Russian financial group Sistema, officially announced its
intention to buy ArmenTel in early April. Moreover, they mentioned a
possible price to be paid for ArmenTel – some 350m dollars, while OTE
announced through unofficial channels that the price its prefers is at
least 400m euros. That’s to say, the Russians intend to pay 150m
dollars less than the Greeks want. It is still not known whether the
Russians have grounds to insist on this price, why the buyer and the
seller failed to reach an agreement and why OTE is trying to find new
buyers. Two days ago, pro-government circles issued a report that
shed light on these developments. That’s to say representatives of the
British HSBC Bank are currently in Armenia to negotiate with possible
buyers and secure a profitable deal. They are trying to agree details
of the sale with the Armenian government, or to be more precise, to
find out the condition of the property. It turns out that the Armenian
government wants to amend Licence No 60 issued to ArmenTel if the
company is sold.

Incidentally, the government intends to end the company’s monopoly on
the Internet and IP telephony. In this case, the company’s price will
considerably fall. The government’s approach seems to be clear at
first sight. A new owner, a new licence. Moreover, the government’s
approach seems to be in favour of Armenian companies as this will
secure competition in the aforesaid spheres.

However, the matter is that the government is doing this not to create
competition, but to enable the Russians to buy ArmenTel for as little
money as possible. With or without a licence, Armenian companies have
no money to access the international market because this requires
dozens of millions of dollars.

Amendments to the licence will not lead to any changes in the IP
telephony sphere either. Despite ArmenTel’s monopoly on IP telephony,
there are numerous Armenian companies engaged in this sphere. Even if
all monopolies are taken away from ArmenTel, this company will
continue having a natural monopoly on Armenia’s telecommunications
system as no-one will set up a new “ArmenTel plus”. The establishment
of such a company is economically unfavourable as the country’s
telecommunications market is too small and limited.

In fact, the government’s demand aims to favour a possible Russian
buyer.

Having “an outpost” like Armenia, the Russian buyer has every reason
to make no compromise on the price to OTE. The latter cannot sell its
stake to anyone else as the consent of the Armenian government is
required for this. In these conditions, the only way out for the Greek
company is to abandon the idea of selling its stake. However, it might
turn out that making such a decision is not easy either, i.e. it is
not so difficult for the Armenian government to force a company to
take any step they like. Of course, the Armenians are relatively
polite in this regard as they are dealing with the Greeks. However,
when the Russophilia of the Armenian government is in question, their
politeness disappears.