ARMENIA’S REGULATORY COMMISSION TO REJECT ARMENTEL’S APPLICATION

ARKA News Agency, Armenia
July 9 2007

YEREVAN, July 9. /ARKA/. The RA Public Services Regulatory Commission
intends to reject an application for a revision of prices for major
and minor services rendered by the ArmenTel Company. The Commission
is to hold its sitting on July 13.

On its website, the Commission considers the arguments for price
revision advanced by the company as unacceptable. The Commission
regards as inadmissible the proposal for incorporating the interest
rate of long-term bonds in the calculations of the non-risk interest
rate of the cost of its equity capital, as the interest rate of
long-term government bonds in the countries with underdeveloped
capital market includes the amount of market capital.

The Commission also intends to reject ArmenTel’s application
for incorporating the floating funds of expenses on the internal
interface of telephone networks in the circulating funds, as they
are only calculated values and do not require floating funds or the
application of the depreciation standards set in the taxation sphere
for the calculation of depreciation.

The Commission regards as inadmissible the fact that the ArmenTel
Company did not present any oral justifications of expenditure
distribution principles, particularly expenditures on services,
maintenance costs, proposed rise in prices for dial-up Internet
access. The Commission also rejected ArmenTel’s proposal for the
revision of the minimum free limit – from the 361st minute to the
1,000th against the current 600th minute.

On June 1, 2007, the ArmenTel Company applied to the Commission
for revision of prices for stationary telephone communication. The
application proposes a reduction of prices for long-distance and mobile
calls, changes in user charges and in some types of telecommunication
services. Some prices will remain unchanged.

Specifically, the prices for calls to Russia and the USA are expected
to be reduced from AMD 192 and AMD 344 to AMD 90 per minute. The
minimum price for calls to European countries is AMD 90 per minute
and the maximum AMD 344.

The ArmenTel CJSC, holding a monopoly of stationary telephone
communication, is one of the two mobile phone service providers in
Armenia. It is owned by the Russian company VimpelCom (under the
Beeline brand). In late 2006, ArmenTel had 608,500 subscribers to
stationary telephone communication and 452,000 mobile communication
users.