By Shakeh Avoyan
State regulators will almost certainly reject a steep rise in the prices of fixed-line telephony sought by Armenia’s Russian-owned national telecommunication company, officials said on Monday.
The ArmenTel operator formally asked the Public Services Regulation Commission (PSRC) to allow it to raise the tariffs last May, saying they have remained unchanged for the past several years and should be revised upwards in order preserve its profitability.
In particular, the company wants to nearly double a fixed fee of 1,100 drams ($3) covering up to six hours of outgoing local phone calls made by a single network subscriber every month. Those users who exceed that limit are currently charged 5 drams (1.5 U.S. cents) for every extra minute of phone conversations.
ArmenTel wants to reduce the six-hour limit and raise the per-minute charge to 9 drams. In return, it would further cut its prices of external phone calls.
A member of the PSRC, Shiraz Kirakosian, told RFE/RL that the regulatory body has looked into the tariff request and will likely turn it down on Friday. He said the commission will argue, among other things, that ArmenTel has underestimated its profit margins and can therefore successfully operate under the existing tariffs.
Kirakosian indicated at the same time that the PSRC is ready, in principle, to accept a more modest price increase. “We need to continue our discussions with ArmenTel,” he said.
The PSRC has rejected similar price hikes in the past when ArmenTel was owned by Greece’s OTE telecom giant. OTE sold its 90 percent stake in ArmenTel to Russia’s second largest cellphone operator, VimpelCom, last November in a $500 million deal approved by the Armenian government.
One of VimpelCom’s first steps was to abandon ArmenTel’s controversial legal monopoly on Armenia’s Internet connection with the outside world. The move is expected to make the service more affordable and faster.