Regulators Reject Rise In Phone Tariffs

State regulators on Friday refused to allow the ArmenTel national telecommunications company to significantly raise the prices of fixed-line phone communication in Armenia.

The Public Services Regulation Commission (PSRC), which has the exclusive authority to set all utility fees in the country, ruled that the tariff increase sought by the Russian-owned operator is not commercially justified. Commission members said earlier this week that ArmenTel is more profitable than it claims to be.

Under Armenian law, the company can re-submit the same demand to the regulatory body within the next 45 days. Its chief executive, Oleg Bliznyuk, said he will likely make use of that right. “We will stand by our tariffs,” he told reporters after the announcement of the widely anticipated decision.

ArmenTel 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 would reduce the six-hour limit and raise the per-minute charge to 9 drams. In return, it would cut some of its other tariffs, notably the cost of making phone calls abroad.

Bliznyuk said that although his company is profitable at present, it needs to generate additional revenues in order to press ahead with a planned large-scale modernization of its phone network. He also argued that it has voluntarily abandoned most of its remaining exclusive rights to telecom services in Armenia and needs to make up for the resulting losses.

“We must enter the liberalized market with liberalized prices,” said Bliznyuk.

The ArmenTel chief indicated at the same time that the subsidiary of Russia’s VimpelCom mobile phone operator is ready to negotiate and reach a compromise agreement with the PSRC.

VimpelCom bought ArmenTel from Greece’s Hellenic Telecommunication Organization (OTE) in a $500 million deal approved by the Armenian government last November.