Kommersant, Russia
June 10 2006

Armentel Divided by Five
// Russian operators will divide Armenia

Major Russian telecommunication conglomerates – Sistema, Rostelekom,
and Vympelkom – joined the tender to buy Armentel, largest Armenian
operator of cellular and fixed-line telephony, this week. Three
Russian companies will compete with five foreign operators. The most
serious rivals are MTS of Kuwait and Etisalat of the United Arab
Emirates. Despite the impressive entry list, experts believe that
Russian companies have a good chance to win the first victory ever in
the international tender for telecommunication assets.
Kommersant learned that primary offers to buy Armentel came from
Russia’s Sistema, Vympelkom, and Rostelekom, Kuwait’s MTS Kuwait,
Armenia’s Sil group, Belgium’s Belgacom, Hungary’s PanTel, and Arab
Emirates’ Etisalat.

Greek corporation OTE owns Armentel now. OTE announced its intention
to sell 90 percent of Armentel shares in early April 2006. Armentel
provides service to 595,000 subscribers (that is, all fixed telephone
numbers in Armenia), and controls over a half of cellular
communication market, serving more than 50,000 subscribers. Armenian
government owns 10 percent of Armentel. The company’s turnover
reached 110 million in 2005.

OTE’s disagreement with Armenian government about business strategy
impelled OTE to sell its assets. The government is completely against
tariff raising and charging fixed telephone subscribers for time.

The outcome of the tender will become known after July 20. Experts
estimated the value of 90 percent of Armentel shares at $100-140
million, before the tender. Yet, the impressive entry list indicates
that the asset value may redouble.

It is the three Russian operators who have best chances in the tender
for Armentel. Elena Bazhenova, analyst of Aton investment group,
said: `Russian companies have more chances to win the tender because
they have more contacts and connections with Armenian officials,
which is of great importance for working in Armenia, for the
government strictly controls Armenia’s telecom market.’

by Ara Tatevosyan, Erevan, Nikolai Yablonsky