By Atom Markarian
The Greek management of the ArmenTel operator announced on Friday that it will press ahead with a controversial increase in telephone charges over the continuing objections of the Armenian government. The rise, which will initially affect less than half of the company’s customers, will be phased in beginning next September and involve the introduction of the “time metering” system based on payment for every minute of local phone calls.
The authorities have long opposed the measure, demanding that ArmenTel’s owner, the Hellenic Telecommunications Organization (OTE), prove it has met its contractual obligation to invest $100 million in the Armenian telecom sector over the past three years. A government commission has been verifying OTE claims that it has already invested $127 million.
ArmenTel’s new chief executive, Nikos Georgioulas, insisted on the figure’s credibility and argued that the repeatedly delayed fee increase is needed to remedy the difficult financial situation the telecom monopoly is currently in. The company’s pre-tax profits last year nearly shrunk by half to $6.9 million amid a growing backlog of unpaid bills. It is now owed a total of $21 million from individual, business and government customers.
While admitting serious problems with the quality of phone connection, Georgioulas said the amount of per capital OTE investments in Armenia is four times higher than in other countries of Eastern Europe where the state-controlled Greek firm also has subsidiaries. He claimed that the $142.5 million OTE paid in 1998 for a 90 percent stake in ArmenTel was more than the company’s market value and that this was a “political decision.”
“We came here because we felt nationally responsible for our friends, we took a decision to invest so much money for this reason only,” Georgioulas told a news conference. OTE is allowed to unilaterally raise its tariffs under the terms of the ArmenTel takeover, he added.
“We do understand that the society may feel that it has lost or won from that agreement. But an agreement is an agreement, and it has to be enforced until the day that the two shareholders (OTE and the Armenian government) will sit at the table and change it.”
The introduction of the payment-per-minute system may deepen the dispute with the government which has dogged OTE’s three-year operations in Armenia. Senior officials have said they will not allow the Greeks to go ahead with the measure.
Several parties in the Armenian parliament raised the stakes in the ongoing row late last month when they attempted to legally ban ArmenTel from raising the fees and to revoke the 15-year exclusive rights on all forms of telecommunication granted to OTE in 1998. The National Assembly cancelled a vote on the multi-partisan initiative after a last-minute intervention from the government.
Transport and Telecommunications Minister Yervand Zakharian told lawmakers that both measures would be "untimely" now that the government is negotiating with the ArmenTel management on the issue. The cabinet agreed instead to the creation of a parliamentary commission overseeing its "activities in the sphere of telecommunications."
Georgioulas made it clear that the OTE management will not agree to the scrapping of the ArmenTel monopoly without a corresponding financial compensation from the Armenian side. He said: “We have no problem to abandon the monopoly if we are paid for that. We paid for that monopoly, gentlemen. If you have money we are ready to deal.”
The Greek management of the ArmenTel operator announced on Friday that it will press ahead with a controversial increase in telephone charges over the continuing objections of the Armenian government. The rise, which will initially affect less than half of the company’s customers, will be phased in beginning next September and involve the introduction of the “time metering” system based on payment for every minute of local phone calls.
The authorities have long opposed the measure, demanding that ArmenTel’s owner, the Hellenic Telecommunications Organization (OTE), prove it has met its contractual obligation to invest $100 million in the Armenian telecom sector over the past three years. A government commission has been verifying OTE claims that it has already invested $127 million.
ArmenTel’s new chief executive, Nikos Georgioulas, insisted on the figure’s credibility and argued that the repeatedly delayed fee increase is needed to remedy the difficult financial situation the telecom monopoly is currently in. The company’s pre-tax profits last year nearly shrunk by half to $6.9 million amid a growing backlog of unpaid bills. It is now owed a total of $21 million from individual, business and government customers.
While admitting serious problems with the quality of phone connection, Georgioulas said the amount of per capital OTE investments in Armenia is four times higher than in other countries of Eastern Europe where the state-controlled Greek firm also has subsidiaries. He claimed that the $142.5 million OTE paid in 1998 for a 90 percent stake in ArmenTel was more than the company’s market value and that this was a “political decision.”
“We came here because we felt nationally responsible for our friends, we took a decision to invest so much money for this reason only,” Georgioulas told a news conference. OTE is allowed to unilaterally raise its tariffs under the terms of the ArmenTel takeover, he added.
“We do understand that the society may feel that it has lost or won from that agreement. But an agreement is an agreement, and it has to be enforced until the day that the two shareholders (OTE and the Armenian government) will sit at the table and change it.”
The introduction of the payment-per-minute system may deepen the dispute with the government which has dogged OTE’s three-year operations in Armenia. Senior officials have said they will not allow the Greeks to go ahead with the measure.
Several parties in the Armenian parliament raised the stakes in the ongoing row late last month when they attempted to legally ban ArmenTel from raising the fees and to revoke the 15-year exclusive rights on all forms of telecommunication granted to OTE in 1998. The National Assembly cancelled a vote on the multi-partisan initiative after a last-minute intervention from the government.
Transport and Telecommunications Minister Yervand Zakharian told lawmakers that both measures would be "untimely" now that the government is negotiating with the ArmenTel management on the issue. The cabinet agreed instead to the creation of a parliamentary commission overseeing its "activities in the sphere of telecommunications."
Georgioulas made it clear that the OTE management will not agree to the scrapping of the ArmenTel monopoly without a corresponding financial compensation from the Armenian side. He said: “We have no problem to abandon the monopoly if we are paid for that. We paid for that monopoly, gentlemen. If you have money we are ready to deal.”