Yesterday at Armenia Marriot Hotel the “wedding ceremony” of the second telephone operator of Armenia, “Viva Cell” took place. It’s been several months since the rumors of this “wedding” have been circulating in Armenia, however none of the parties has said anything concrete. Thus the bridal ceremony was postponed for months. Thus the delegation of the Russian Transport Minister, Igor Levitin, which arrived on Thursday, also included the relatives of the bride – MTS company representatives. MTS bought 80 percent of the shares of Viva Cell for 310 million euros, including 50 million euros which the seller will get within 3 years, from 2008 to 2010. The other 20 percent is sold by an option agreement which will come into effect from July 2010 and has legal validity until 2012. First we’d like to speak about these two companies. MTS is Vladimir Putin’s wife’s company. Similarly Viva Cell is considered the property of the elite of the Armenian government. If said in a more simple way, the government of Russia has taken away the property of the Armenian side – that is the second telephone operator of the country. This statement is also proven by the fact that on November 3, 2004 the government of Armenia rapidly deprived Armentel of its monopoly and on the next day the Viva Cell received a license to start functioning. The government of Armenia wouldn’t do the same thing in such a fast manner for any other company. There are also rumors that a small part of the stocks of Viva Cell belonged to the RA Minister of Transport and Communication, Andranik Manukyan and the former Justice Minister of RA, Davit Harutyunyan. Indeed it’s not yet clear who the 20% of unsold stocks belong to – the government or the owner of the company, Lebanese citizen Pierre Fatushin. By this transaction the communications sector of Armenia was handed to the Russians. Last year another Russian company, Vimpel Com bought 100% of the stocks of the greatest communications company, Armentel. At that time MTS also had a wish to attain Armentel but the government preferred Vimpel Com. Viva Cell was established in November 2004 and had started to offer cell phone service since the second half of 2005. During these three years the company attained 986 thousand subscribers, which amounts to 66% of the market. The revenue of the company in the last year amounted to 104 million USD. According to the General Director of Viva Cell, Ralph Yirikyan the net income of the company in 2006 was 25 million USD. In that case why had this company, which had great profits in the sector, been sold? There are opinions that this transaction had political motives. Russia intends to attain all the key and strategic objects of Armenia. And the RA Government cannot withstand their intention because in order to be reproduced they need the consent of the government of Russia. And Viva Cell is the guarantee of this consent. Of course the director of the company Fatush denied this information saying that he is selling the company because he wishes to invest in other sectors of the RA economy. “I am going to invest this money in the construction sector through the project “Downtown” in Yerevan,” said Fatush. “We also wish to invest in mining sector.” There are rumors that the Fatush Group Company during this period has obtained license to research gold mining in Armenia.
Director of MTS, Leonid Melamid has also denied the political context of the transaction. He pledged that they don’t have any mysterious consent in the result of the transaction other than what’s written in the contract. A few months ago there were rumors that the owners of Viva Cell wish to sell the company to MTS at 600-700 million USD.
In any case the transaction has already taken place and the communications sector of Armenia has been fully handed to Russia. How does MTS wish to develop the company? “In near future we are going to apply to the RA government to receive new networks of Internet provision,” said Melamed. At present only Armentel can provide Internet in Armenia. According to the decision of the Commission on Regulating Public Relations starting from October 1, 2007 Armentel is going to be deprived of its monopoly of providing Internet. And if this really works out a drastic change will take place in the Internet sector, which will bring to a better quality of Internet and perhaps price decrease. Although there is no guarantee whether the two companies of the sector will actually compete or operate in an agreed manner. To this question Melamed gave an ambiguous answer, “You better ask this question to Russian journalists who perfectly know the relations between Biline and MTS in Russia.” Before 2008 the new owner is planning to change the price of telephone communication.