By Emil Danielyan
ArmenTel, Armenia’s unpopular telecommunications monopoly, offered on Thursday public apologies for its glaring failure to meet demand in mobile telephony more than six years after being purchased by one of Europe’s biggest telecom firms.
Top company executives also said the subsidiary of Greece’s OTE giant is looking forward to facing competition in the sector as a result of last month’s compromise deal ending its long-running disputes with the Armenian government.
The abolition of ArmenTel’s legal monopoly on mobile phone services was a key term of the deal. It resulted from the operator’s failure to put in place a network that has the capacity to meet demand in cellphone subscription.
ArmenTel has for years resorted to Soviet-style rationing of phone activation cards, unable to cope with an influx of potential buyers. Prepaid cards, ironically called by it “easy-cards,” have been in particularly short supply. Those willing to buy them at a face value of $25 apiece still have to register with ArmenTel offices and wait for months.
The shortages have given rise to brisk speculative trading. A single “easy-card” is now worth as much as $150 in the black market. The price skyrocketed to $200 before the last issuance of the tiny chips in August.
“This is not very usual and I think we have to apologize to the society for this,” ArmenTel’s chief executive officer, Vasilios Fetsis, told a news conference. He said the problem has been partly due to the fact that the company was under “heavy obligations” to modernize Armenia’s Soviet-era fixed-line phone network.
Fetsis added that it is now gearing up for competition with a Lebanese firm which was controversially chosen by the government as Armenia’s second wireless operator last month. “Some might say the loss of monopoly on mobile telephony is not good news for ArmenTel,” he said. “In some sense this is true.
“But we believe that operation of a mobile business under competition, if treated properly and if we manage to maximize the skills of our personnel, could be an excellent school for the company.”
Fetsis indicated that ArmenTel hopes to keep the Lebanese competitor at bay by investing more heavily in its wireless network and trying to double the number of its subscribers to 400,000 by the end of next year. He said its overall capital investments in 2005 will reach $73 million, up from $33 million it claims to have invested this year.
As part of its deal with the government, the operator is to speed up work on digititalizing the fixed-line exchanges in Yerevan and other cities and to restore phone access in more than a hundred remote villages. ArmenTel was in return allowed to raise its fixed-line tariffs and retain its grip on Armenia’s Internet connection with the outside world.
Local Internet service providers have long been complaining about the low quality and high cost of the service. Experts say the monopoly also stifles the development of information technology in Armenia. Fetsis pledged to address this problem as well, saying that ArmenTel will boost the capacity of its Internet facilities and cut the tariffs by 20 percent.
ArmenTel’s hitherto strained relations with the government in Yerevan led OTE to repeatedly threaten to sell the company to another foreign investor. Its chairman and chief executive, Panayis Vourloumis, did not exclude such a possibility in a newspaper interview last September. However, he admitted that ArmenTel is still one of OTE’s best-performing overseas assets.
According to Fetsis, the ArmenTel is on track to make $49 million in net profits this year and $45 million in 2005.
(Photolur photo: Vasilios Fetsis.)