By Ruben Meloyan
The Russian owner of the national telecommunication company ArmenTel said on Monday that it will invest $74 million this year in the ongoing modernization of its fixed-line and mobile phone networks in Armenia.
The VimpelCom operator claims to have made about $90 million worth of such investments in the course of last year. Senior VimpelCom executives said the additional investments are aimed, among other things, at reversing ArmenTel’s declining share in Armenia’s market for wireless service.
The decline began immediately after the abolition of ArmenTel’s legal monopoly on mobile telephony and the launch of the country’s second wireless network, VivaCell, in 2005. Less than one third of an estimated 2 million Armenian mobile phone users are currently subscribed to the ArmenTel network. VivaCell, which is owned by another Russian telecom giant, MTS, claims to have attracted 400,000 subscribers during the past seven months alone.
According to Dmitry Pleskonos, a VimpelCom vice-chairman, ArmenTel’s market share stood at about 40 percent a year ago. Pleskonos blamed the drop on the ongoing upgrading of the ArmenTel network, which causes periodical disruptions in phone connection, and VivaCell’s aggressive marketing strategy. “We did not react sufficiently to the activity displayed by our business competitors,” he told a news conference in Yerevan.
Pleskonos and other VimpelCom executives spoke to journalists as ArmenTel officially renamed its wireless division Beeline, the brand name of the VimpelCom networks in Russia and several other former Soviet republics. The name change appears to be part of the company’s strategy of improving the reputation of its Armenian subsidiary.
ArmenTel earned notoriety for the poor quality and high cost of service under its previous, Greek parent company, OTE. The latter’s failure to invest in and expand the wireless network meant that Armenia had less than 300,000 mobile phone users as recently as three years ago. The service became accessible and affordable for the average Armenian only after the abolition of the ArmenTel monopoly.
VimpelCom has been grappling with ArmenTel’s negative image ever since paid about $500 million to buy the company from OTE in late 2006. Pleskonos said the renaming of the cellphone network will also boost the quality of its service.