"THIS YEAR WAS SUCCESSFUL FOR ARMENTEL"

Mediamax Agency
Dec 11 2007
Armenia

Interview of the General Director of "ArmenTel" Company Oleg Bliznyuk
to Mediamax Agency and Banks.am portal

– "ArmenTel" Company ceased being a monopolist in the
telecommunications market of Armenia on October 1. What does this
mean for the Company and for the market as a whole? I remember you
said that "universal happiness will not start on October 1".

– Firstly, the decision on liberalization of the market only was
made on October 1 of 2007. The procedure itself is still subject to
discussion: corresponding political and economic levers have to be
elaborated yet.

As to my vision, the liberalization of the market does not mean that
if someone wants to provide services, he goes and receives a license
and starts providing those services at home or in the basement. In
practice, the very notion of "service" consists of many components,
starting from the quality and up to, for example, international
commitments in the sphere of internet and the international connection.

I am not at all against appearance of new providers, I am simply
against low-quality services. See, if people do not buy from us a
channel with the corresponding transmission line capacity, the final
quality of their services, naturally, will suffer, but the completely
unjustified references, according to which "ArmenTel" is the one to
be blamed, will continue appearing.

Another question appears as well: how are those companies going to pay
the taxes? Will the situation, which was in the past, remain, or will
everything become official? Various kinds of abuse are possible here.

So, indeed, "great happiness", of course, will not take place. I
believe that in the course of time, only a few companies will remain
in the market, which will really carry out transparent work and will
provide quality services.

I believe that it will become possible talking about real
liberalization of the market only in a few years. The regulator, to
give its due, has done volume work, but I still have the impression
that we are running ahead of the locomotive.

What concerns "ArmenTel", we, of course, know how we will act. We
will surely defend our economic interests, at that obeying the
Armenian laws.

Liberalization will not have negative influence on our customers.

Renouncement of monopoly did not cause our Company major
consequences. Yes, we can lose a part of our international and
inter-town traffic, but we are ready for that and we are ready to
compete. The most important is that the competition is fair and honest.

– Can we assume that the purchase of 80% of "VivaCell" shares by
MTS will make your competition more predictable and civilized, since
"VimpelCom" and MTS have been for a long time competing in Russia?

– I do not think that MTS will make any notable changes in the work of
"VivaCell" before the spring of 2008. MTS is a high-tech and advanced
company, and they will undoubtedly try to implement the culture of
high technologies in Armenia.

We know what to expect from MTS, we are competing in many markets,
and this competition is of civilized nature. We realize that there
will be no abrupt changes in Armenia, capable of collapsing the market
or harm any of the companies.

– More than a year has passed from the moment of acquisition of
"ArmenTel" by "VimpelCom" Company. What achievements have been made
in the course of this year, and what, on the contrary, you did not
manage to do?

– First of all, we realized then that much time and many efforts would
be needed to understand what was going on in the company, since a
certain part of information at the moment of purchase was unavailable
for us. In the course of a year, we had to pay much attention to the
organizational issues. Let’s say, we planned to prepare a basis this
year for advancing in future – to settle the things with billing,
the fixed connection, construction of new basic stations.

A very important fact is to settle the matters with the people, who
work here, to solve the issue of social guarantees of the employees.

Professional examination of employees has never been realized here.

Of course, it took us much time to understand everything and to
establish order.

It took certain amount of time for the implementation of special
procedures in "ArmenTel", which existed in "VimpelCom" and which
correspond to the international accounting standards. Of course,
it is difficult working with old procedures and simultaneously
implementing the new ones. The shift of the billing system was
accompanied with technical costs, which are inevitable in such cases,
since we implemented a completely new version, which is not used even
in Russia yet.

Having analyzed the existing equipment of the mobile connection, we
realized that we could not work with it. Despite the fact that the
equipment was relatively new, it did not support many new functions,
necessary, in particular, for the implementation of 3G. As a result,
there was a decision made on changing the whole equipment, and this,
of course, took us much time.

I consider this year a successful one for the Company, since we put
an important start for the future, carried out huge amount of rough
work, which is not visible beyond the borders of the Company.

– Will the technical modernization that you mentioned lead to the
extension of the coverage zone of "ArmenTel" mobile network?

– By the end of 2007 376 basic stations will function in the
"ArmenTel"’s network. As a result, even today we have almost reached
parity with the competitor, concerning the coverage part. When we
purchased the company, the coverage made 65% of the populated territory
of Armenia. Today the mobile network of "ArmenTel" covers over 90% of
the populated territory of the country. We continue installing basic
equipment and we intend to conclude the work, planned for this year,
by mid-December.

– So, you consider that the correlation, which exists today in the
mobile connection market of Armenia – 65% of "VivaCell" subscribers
and 35% of "ArmenTel"- will still change?

– Of course, the picture will change and we work for that. We are
not going to accept the situation, when "VivaCell" became the leader
of the market in the course of two years. We use the potential,
the knowledge and the financial opportunities of "VimpelCom" Group
to change the situation.

You know, it is possible to build a wonderful network, but if no one
knows about it, the old stereotypes will function. Unfortunately,
those stereotypes still exist, although "ArmenTel" is the national
property of Armenia irrespective of who the owner of the Company is.

We stand face to face with our subscribers and we worry very much,
when we are informed that someone was rude with the customer in the
service office. We have even launched a "helpline" for the people to
inform us timely on violation of their rights. I assure that if you
call this number and say the name of the employee of "ArmenTel", who
was rude and unjust to you, and the results of the check prove that,
we will say good-bye to such an employee.

We have set for ourselves the task to become the best service
company in Armenia. We have all the necessary components for that –
the experience of "VimpelCom", technical opportunities, good people,
who want to work and who think about the Company.

– Lately, the leaders of Armenian companies, irrespective of their
sphere of work, in increasing frequency raise the problem of lack of
qualified personnel. Does "ArmenTel" come across this problem? If we
talk about the high and middle level managers, is it better to train
them within the company or invite from abroad?

– The problem of invited specialists is not that acute for purchased
companies. I believe that the invited managers are necessary for the
first 2-3 years to implement certain business-processes and implant
corporate culture. But for the most part, the personnel should be
the local one – Armenians should work in an Armenian company.

There is the problem of shift of generations. We have a project
called "HR Reserve" in "VimpelCom", the essence of which is that each
top-manager brings up people to a certain degree, since those people,
sooner or later, will come to substitute him. We will implement this
scheme in "ArmenTel" as well.

– In summer of 2007, you put into commercial exploitation the service
of broadband internet with the use of ADSL technology. How demanded it
proved itself and can we assume that in the course of time "ArmenTel"
will develop this type of services under an independent brand?

– There is a specail group established in the Company, which works to
develop this direction. It is yet quite cumbersome for the subscriber
to connect to this service and we strive to facilitate the process as
much as possible. I believe that in the beginning of 2008, serious
changes will take place, which will concern both the prices and the
types of the services provided.

– Returning to the issue of stereotypes, certain part of the society
has negative emotions for the very name of "ArmenTel", which is
conditioned by the "Greek past" of the Company. On the other hand,
you repeatedly stated that you do not consider the change of the
brand justified before securing high quality of services. How can
this dilemma be solved?

– My personal attitude towards "ArmenTel" brand is very positive. It
is another question that very serious mistakes were made in the past.

I believe that we will not renounce the "ArmenTel" brand concerning
the fixed connection.

What concerns the court examination with the Armenian "Bi Line"
Company, I think that soon this contingency will be solved and we will
have an opportunity to present mobile connection services under our
brand in Armenia. But my strict stance is that we should fundamentally
improve the service, the quality of services and the attitude towards
the subscribers before that. We do not want to position the existing
negative attitude to the new brand.