DUMPING IS SOMETHING WE JUST CANNOT AFFORD
Aram Gareginyan

ArmInfo
2009-02-03 18:44:00

Interview with director general of FTA-Telecom Bruno Duthoit

On Nov 19, 2008, FTA-Telecom, a subsidiary of France Telecom in
Armenia, received a mobile connection license, thus becoming the
long-awaited third mobile operator in Armenia. Company’s director
general, Bruno Duthoit, expresses the plans of development of the
company and its view of Armenian telecom market.

What are your plans for the Armenian market in general – in terms of
subscriber base and investments?

I don’t think we’ll gather a large client base before the end of the
year – it’s hardly if ever possible to attract a large subscriber
base in such a short term, regarding the competition.

It is difficult to say about investments, because this figure
is confidential in our budget. What we can say is that we’ve got
sufficient budget to build the network we want to build. We are
determined to develop a most modern one.

According to your investment plan, you’re going to allocate 200 mln
Euros in five years…

Not really so. The government demanded not the sum itself, but rather
the ability of our mother company, France Telecom, to invest that
much. So it is not a commitment, but a capability. But it’s not
necessary to place this much so far.

What is the actual volume of investments you’re going to place in
predictable future – say, in five years?

It depends on several factors, one of which is the price for
equipment. Now it is decreasing a lot – for the same network we now
have to invest some 30% less than we would seven years ago. And
the trend is continuing, so we have a good possibility to reduce
our expenditure for equipment. Although I’d prefer not to disclose
definite figures at this stage, I can definitely say we will provide
a good coverage and a good service. One thing about the equipment
is that in November we’ve announced a worldwide tender to choose a
supplier. In the end of February we will summarize it, and one or
two months later we’ll start to install the equipment.

What are your commitments of coverage, according to the tender?

We have to cover 42 major towns in two years, including the capital
city Yerevan. Naturally we will do it, and we will do it sooner.

Two active mobile operators have a total client base of some 2,7 mln
– close to an upper limit, if we consider the Armenian population
3 mln and something, knowing there’s a certain number of population
(under-aged and extremely old) who never use a mobile phone. What is
your estimated amount of subscribers before the end of the year?

First, we believe there’s still some part of the population who still20
doesn’t have access to mobile telephony – old people, young people,
etc. Secondly, we’ll also propose service to people who already have
a SIM-card. You know, in Armenia, particularly in Yerevan, there are
a number of people who already have two SIM-cards – one VivaCell and
one Beeline.

In a whole, it’s a normal market, particularly comparing it with
Ukraine or Russia, where penetration rate is sometimes well beyond
100%.

As to the number of potential subscribers, we’ve done a survey,
the precise results of which we’ll have in two or three months, but
evidently there are some 300 – 400 thousand people, who either don’t
use mobile phone or use it occasionally.

What are your expectations of the Mobile Number Portability option? How
widely will you use it?

Number portability is giving possibility for customers to choose
the most appropriate offers, while keeping the same number; it is
not existing in Armenia but regulation body declared in January that
there is on-going analysis of conditions of possible implementation
in the country.

What kind of activities are you going to undertake in the Internet
market?

Will you try to enter the broadband market as well?

We don’t intend to enter the Internet fixed wireline market, but
the mobile license received by Orange gives possibility to provide
broadband wireless services; we don’t have a Wimax license a nd don’t
intend to apply for in 2009.

Will your tariffs match those of the two active operators?

Naturally we don’t see the reason to take the initiative of price war.

We don’t see the reason why Orange should take a start with labels
like "unprecedented – 30% lower". We will approach our clients with
something new on the market – that regards quality as well. Price is
important, but it’s not everything, you know. Mainly the tariffs will
depend on average factors like costs of equipment and interconnection,
salary of employees, etc. But, all considered, we are going to be
affordable for all groups of population, including those who have
never used a mobile phone.

No dumping, in a word…

We couldn’t do that, even if we wished. The prices for telecom
services in Armenia are quite low – about 2 – 2,5 times lower than
in France, and we have to invest a lot to expand and attract the
customers. Dumping is something we just cannot afford.

You haven’t started your operations, yet you’ve entered the list of
300 major taxpayers of Armenia, with 2,3 bln Armenian Drams. How do
you explain that?

That was the tax from our license, which we obtained and paid last
year, not the taxes from actual activities.

When are you going to start to operate?

We will definitely launch before the end of the year.

What kin d of image of your brand you’re going to create in Armenia?

We won’t choose a particular group of population. We are going to
serve youth, business clients, families and so on and make special
approaches for all of them.

Thank you