RUSSIA’S MEGAFON RULES OUT ARMENIAN EXPANSION
by Michael Lacquiere

World Markets Research Center
Global Insight
May 16, 2008

Russia’s third-largest mobile operator, MegaFon, has indicated that
it has no plans to expand into the Armenian market, according to
company representative Tatyana Zvereva, as quoted inARKA. Armenia’s
existing two mobile operators, Armentel and VivaCell, are owned by
MegaFon’s two Russian rivals, VimpelCom and Mobile TeleSystems (MTS)
respectively. A third GSM licence in Armenia is due to be issued this
year at a starting price of 10 million euro ($15US.5 million).

Significance:With its ownership structure now becoming clearer,
MegaFon is beginning to outline its long-term strategic plans, which
appear to include a possible initial public offering (IPO), as well as
entry into the Iranian mobile market (seeRussia: 14 May 2008:and13
May 2008:). Unlike MTS and VimpelCom, MegaFon has opted against
expansion across the CIS region, with Tajikistan the only country in
which it has a presence beyond Russia. While the investment of MTS and
VimpelCom has helped to stimulate subscriber uptake in Armenia, mobile
penetration in the country remains fairly low and a third operator
would therefore have a reasonable chance of establishing itself.