World Markets Research Centre
June 10 2009

France Telecom Includes $200US-mil. Investment and Mobile Internet
Provision in Armenian Unit Plan

BYLINE: Michael Lacquiere

France Telecom has been outlining its ambitions in Armenia where it
has gained GSM and 3G licences and plans to launch commercial services
under the "Orange" brand in the fourth quarter of 2009. France Telecom
vice president for mobile communication, Olaf Swantee, is widely
quoted as telling journalists that investments in the new operator
will total around $200US million, of which $80US million will be spent
this year. Mobile penetration in Armenia is currently around 80%, with
subscribers shared between the Russian-backed duopoly of MTS-owned
K-Telecom and VimpelCom-owned Armentel. However, France Telecom has
indicated that it will focus largely on mobile Internet, in a country
where Internet penetration is around 25%. Swantee also noted that
there is a healthy political relationship between Armenia and France,
and that France Telecom is encouraged by the commitment of the
Armenian authorities to develop the country’s economy and create a
favourable
investment climate. France Telecom has indicated that the majority of
Orange Armenia’s staff will be local employees, with foreign experts
initially invited to train Armenian specialists.

Significance:Swantee’s emphasis on Orange Armenia’s plans in the
mobile-Internet sector is particularly notable. Given that mobile
penetration in the country is already so high and the existing duopoly
so firmly established, the operator’s chances of making an impact in
the voice telephony sphere are relatively weak. The heightened degree
of focus on the fairly nascent mobile-Internet segment therefore makes
strategic sense as a means of attracting subscribers and generating
revenue. Although both K-Telecom and Armentel already offer 3G
services, these are still fairly recent innovations in the Armenian
mobile sector, Armentel having launched services in October 2008 and
K-Telecom in April 2009. Orange Armenia would therefore not have as
much ground to make up as in the voice telephony sphere. Orange
Armenia’s pledged $80US-million investment in 2009 compares to around
$35US million from K-Telecom and $79US million from Armentel in 2008,
indicating the
commitment France Telecom is making and reiterating that its
ambitions in the country are long term.

From: Emil Lazarian | Ararat NewsPress