ARMENTEL PLEDGES TO AVOID TARIFF INCREASES DESPITE PRESSURE OF FINANCIAL CRISIS

World Markets Research Centre
Global Insight
April 2, 2009

Armenian mobile operator Armentel has indicated that it has no plans
to increase tariffs in the wake of the financial crisis. Company
Director General Neicho Velichkov is widely quoted as telling a news
conference this week that the financial crisis must not prevent the
group from implementing its scheduled programmes, adding that no job
cuts were planned in 2009. He admitted that if the situation changed
for the worse tariff hikes may be implemented, but emphasised that
none is currently planned.

Significance:Armentel’s parent company, Russian integrated operator
VimpelCom, has been severely hit by the financial crisis, particularly
as so much of its $8US-billion debt is rouble-denominated (seeRussia:
11 March 2009:). It is therefore debatable whether Armentel will
benefit from the same level of investment as it has in previous
years. Nevertheless, the operator appears confident that the current
economic climate should not force it to hike tariffs. IHS Global
Insight estimates that at the end of 2008 mobile penetration in
Armenia was below 80%, leaving room for organic growth and continued
revenue generation. This ought to provide something of a buffer for
Armentel’s finances in 2009, particularly as 3G services have only
recently been launched in the country.