INTERVIEW WITH VIVACELL GENERAL MANAGER RALPH YIRIKYAN

ArmInfo
2008-08-26 17:49:00

ViVa Cell intends to invest approximately USD 60 mln in its
infrastructure

What is the volume of investments into VivaCell infrastructure planned
for the current year? Is MTS Group participating?

We intend to invest approximately USD 60 million. This entire amount
is to be covered solely by VivaCell, without any participation from
other sources.

Being a part of MTS group, we are happy to be able to maintain our
network by our own efforts, as well as to expand and improve, which
is indispensable to keep pace.

Which are the leading directions for investments?

Expanding our telecommunications network is on top of the
priorities. Our ambition is to be available for the whole Armenian
population. If there’s a point on the map where we are not reachable,
we consider it as a challenge. We give major attention as well to
keep up the quality of connection at the appropriate level; we also
invest in upgrading our hardware and software. Besides, we are focused
to accomplish our own 3G network. We also pay major consideration to
staff management and trainings.

When is 3G due to be launched? What are the designed location and
the expected structure and number of the subscriber base?

We plan to finish deploying the network by the end of the year, or
within the first two months of 2009 utmost. At the first stage we
plan to enable the capital Yerevan and two major cities of Gyumri and
Vanadzor. As for target market, we have expectations from the business
sector, yet the 3G in Armenia is relatively new, thus the network will
probably serve business centers and their roundabouts. But the service
is hihgly probable to be attractive for non-business subscribers. Last
but not least, the demand of the new service will be determined by our
tariff policy, which we haven’t yet planned. As soon as we do that,
we’ll be able to speak extensively and precisely.

Will you heed the existing market prices?

To define the most reasonable tariff package, we study the experience
of telecom operators abroad, as well as the demand rates. Our prices
may exceed the existing ones, be lower or equal to them. There is a
certain competition in the market, but our tariffs will be modified
not only by the prices of our competitors, but also by the quality
of our services and the demand for them.

Which are your technical partners in building up 3G?

At present we collaborate with Alcatel and Ericsson. There are several
other telecom equipment providers, but their names are rather not to
be revealed for a while – we’ll announce them as soon as the system
is effective.

Do you follow expanding your GPRS network?

We have already shifted to a more advanced EDGE standard. Here we go
on expanding, as the demand is evident.

President of MTS Mr. Melamed spoke about possible cooperation with
Comstar-OTS in the field of Internet services. Is it active now?

There are no negotiations at the moment, but we don’t exclude any
option for collaboration, if it is mutually profitable.

What’s the current stage of the rebranding campaign? Will VivaCell
be substituted by MTS, or you will retain your original trade mark?

Our rebranding campaign is a gradual one. Now it is undergoing
co-branding, as we expose VivaCell and MTS logos together, which
will lead eventually to MTS logo and brand alone. During co-branding,
we will try to migrate the qualities of VivaCell, its attributes and
public perception, into the new brand of MTS. To evaluate our next
steps in that direction we will undertake several market surveys and
studies to find out which brand is more favored by our customers,
and their opinion will be very valuable to us. The final decision
on whether to change the brand or to migrate fully from co-branding
to the MTS brand will in many ways depend on this. The duration of
the co-branding campaign is not limited – it may last from a few
months to more than a year. It all depends on when the opinion of
our subscribers will be fully clear to us.

Generally, which brand is more likely to be successful in Armenia –
an Armenian or a foreign one?

It is the quality of s ervice and products which support the
brand. There are foreign brands highly favored by Armenian customers,
and there are ones they definitely reject.

Does one need to carry on corporate social responsibility programs
to achieve brand success?

Those programs are valuable, as they asisst in gaining confidence and
popularity in the world of business, and among the population. Still,
they are important, but not crucial. The main thing is to make evident
the work which is carried out to support the brand in the market. If
a company makes it clear that it fulfills all its commitments,
leading a transparent and honest business with everybody – be it a
customer, a market partner or a supplier – the brand is supposed
to be successful. It was not for nothing that VivaCell gained
the reputation it has today – it is the inevitable result of our
commitment, achievements and consistency.

Average cell phone usage per capita in Armenia has been behind of that
in most of CIS countries – less than 200 minutes per month. What is
the current situation?

Among VivaCell customers this index has exceeded 200 minutes and
still tends to grow – we consider it in our budget drafts. I wouldn’t
like to indicate the exact number we will reach by the end of the
year – it would mean to undertake a commitment, which might not
be accomplished. But I assure you that by the end of=2 0the year
the figure will be over 200. Also, the average will not be backed
by Yerevan only, as we’ve got large numbers of active users in the
regions too.

What is the mobile penetration rate today in Armenia?

If we take the whole number of the subscribers of both operators
as 2,2 mln and consider the population as 2,8 mln, then we’ll
get the percentage of 78,5%. Along this, it is widely known that
certain groups of people hardly become mobile phone users – little
children and the elderly people, as well as the population that is
categorized below the poverty line. Together they make about 15% – 20%
of the population. Thus, practically the saturation point is clearly
within sight. But it is possible to surpass the practical limit –
and exceed the threshold of 100%. You know that a considerable number
of subscribers utlize several SIM-cards or dual ones.

Do you think that the third operator will be at first partly employed
the same way?

It is possible, because it’s natural. The initial period is always
a trial one – we made it the same way. The difference today is
there’s a larger scale of possibilities to subscribe to more than
one operator. And, though narrow, there still remains a gap between
potential clients and actual ones. Most of them are inclined to
use a cell phone, but have doubts about financial reasonability. We
set affordable tariff packages for them, which helps them to make a
turnaround in their point of view.

Does it imply that the new entrant also will set low-cost prices for
a start?

We cannot anticipate what the strategy of the third operator will be,
however and regardless of everything VivaCell was and will always be
offering state of the art services with competitive prices.

Who is more likely to fulfill the vacancy – a giant enterprise or a
relatively modest one? There are both kinds on the list…

It is difficult to make predictions now. But one thing is obvious –
as soon as the third operator steps in, the choice for the customer
will grow and each customer will have more varieties and options
to choose from. The whole economy will benefit, and not only the
telecommunication field. The new entrant will launch a large promo
campaign, import new equipment, build its infrastructure and create
new jobs. For all that large sums will be spent, custom duties will be
paid, then the company will become a regular taxpayer, its employees
will pay income tax. To conclude, new operator will spend many efforts,
but everyone will benefit.

What are your plans for charity programs before the end of the year?

Let me correct you. What we do is not charity, but Corporate Social
Responsibility. When, for example, we help repairing a hospital or a
kindergarten, it is an expression of a responsibility20and obligation
that we feel as a corporate citizen towards the society we live in,
the society which keeps our business going. One needs to understand
– no one is going to help the country the way its people will. We
Armenians are responsible to build a future for our country – and
the responsibility is ours alone.

Thank you