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Armenia To Have Another Cellphone Operator


Armenia - Gagik Khachatrian, head of the State Revenue Committee, at a news conference in Yerevan, 20Feb2013.

Armenia - Gagik Khachatrian, head of the State Revenue Committee, at a news conference in Yerevan, 20Feb2013.

A company reputedly controlled by a powerful and controversial government official was formally authorized to become Armenia’s fourth mobile phone operator on Monday.

The Ucom operator, which runs the country’s largest fiber-optic cable network providing broadband Internet and fixed-line telephone connections, will pay 6.2 billion drams ($15.4 million) for a relevant license granted by the Public Services Regulatory Commission (PSRC). The five-year license will be valid from January 2015.

The Armenian authorities’ decision to further liberalize the domestic mobile phone market came despite its near saturation achieved in recent years. The once underdeveloped sector has seen rapid growth since the national telephone company, ArmenTel, lost in 2005-2007 a legal monopoly on all telecommunication services.

The sector currently consists of ArmenTel’s wireless division Beeline, the VivaCell network belonging to another Russian telecom giant, MTS, as well as Orange Armenia, a subsidiary of France Telecom. The three operators have been fiercely competing in the local mobile phone and Internet markets.

The emergence of a fourth cellphone operator came as a surprise for Orange. “It’s hard to understand how it will benefit the market,” Lilit Martirosian, a spokeswoman for the company, told RFE/RL’s Armenian service (Azatutyun.am). “The Armenian telecom market is already quite developed and competitive.”

Beeline’s official reaction was less negative. “Our sector is quite stable and this development will add an interesting escalation to our day-to-day work,” said Anush Beghloyan, its spokeswoman.

Ucom was founded in 2007 and has since become one of Armenia’s leading Internet service providers. Its rapid expansion is widely attributed to Gagik Khachatrian, the controversial head of the State Revenue Committee (SRC), the Armenian tax collection agency. Armenian media outlets, opposition politicians and some analysts consider Ucom one of more than a dozen lucrative companies effectively owned by Khachatrian. They have for years portrayed the SRC chief as one of the country’s richest men.

Khachatrian has repeatedly denied the business interests attributed to him. In a statement filed with a presidential anti-corruption body last spring, he said, among other things, that one of his cousins holds a 41 percent stake in Ucom.

“[Khachatrian] has nothing to do with us,” Hayk Yesayan, the Ucom chief executive, insisted on Monday.

Yesayan said his company has been a success thanks to the high quality of its services, which also includes cable television, resulting from the use of advanced telecom technology and equipment. “Armenia is now one of the few countries of the world with a rising number of fixed-line users,” he told RFE/RL’s Armenian service (Azatutyun.am).

These assurances will not quash speculation that Khachatrian was instrumental in the Armenian government’s decision to allow the emergence of a fourth wireless operator. Some government critics are already worried about possible foul play in what is currently one of the most competitive sectors of the Armenian economy.

“There won’t be equal conditions there,” claimed Vahagn Khachatrian, an economist and senior member of the opposition Armenian National Congress. “The emergence of a company sponsored by the head of the SRC is dangerous.”

In an annual report released in March, Armenia’s state human rights defender, Karen Andreasian, said that owning businesses is the norm among tax and customs officials. The report said some of the companies belonging to them or their cronies enjoy privileged treatment by the tax authorities, undermining their competitors. The SRC denied that, saying that the ombudsman failed to come up with any concrete examples.
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