ARMENTEL’S SHARES TO BELONG TO RUSSIAN HOLDING SYSTEMA AND
ARMENIAN-INDIAN CONSORTIUM

ARKA News Agency, Armenia
July 24, 2006

YEREVAN, July 24. /ARKA/. ArmenTel’s shares are to belong to Russian
holding Systema and international consortium established by VTEL
Holdings and Knightsbridge Associates. ComNews reports referring to a
source close to negotiation and tendering processes said the Russian
company would take cable telephone system over while Indian-Armenian
consortium will set control over mobile communication system.
The Russian company Director on Public Relations Irina Potekhina
neither confirmed nor denied the information. She said the tender
results would be announced in the beginning of August. Systema Company
started negotiating on ArmenTel purchase yet in early 2006, before
tender was announced. "Already having arrangement with Greeks, Systema
lobbied its interests at the highest level, in Armenian government,
and secure the same backing in Moscow", ComNews reports referring to
the source.

OTE Greek Company announced the international tender already knowing
the buyer, ComNews says. More than ten companies, including German
Deutsche Telekom, Norwegian Telenor, Swedish TeliaSonera and Tele2as
well as Russian CBOSS took part in the contest. Vimpelcom, a merger
comprising two companies Emirates Telecommunications Corporation
and Istithmar (one of Russian Synterra co-owner) – took a lead over
its rivals. All the mentioned companies were included in shortlist.
ArmenTel, Armenia Telephone Company, enjoins is the sole Internet
service provider. The company has enjoyed the monopolist right since
1998. The term of enjoying this right expires in 2013. The company
belongs to Greek OTE, who acquired 90% of ArmenTel’s shares in 1997
for $142.47 million. The remaining 10% belong to Armenian government.
ArmenTel served over 328.6 thousand mobile communication subscribers
by late March 2006. The same number of subscribers was served
by K Telecom, the second mobile communication provider. ArmenTel
also provide cable phone services to 600 thousand subscribers. The
company’s earning for 2005 totaled $145.3 million and net profit
$55.9 million. M.V.