By Emil Danielyan
Greece’s Hellenic Telecommunications Organization (OTE) released on Friday a shortlist of four foreign companies that will submit bids for its 90 percent controlling share in Armenia’s national telecom operator, ArmenTel.
The four bidders, among them the owners of Russia’s two largest mobile phone operators, were selected from a pool of ten companies that expressed a desire to buy ArmenTel after it was put up for sale by OTE last April. The shortlist also includes two consortiums led by the Dubai-based Emirates Telecommunications Corporation and Britain’s Knightsbridge Associates.
Reports in the Armenian press have said the Greeks’ asking price for ArmenTel is at least $400 million. OTE had paid $200 million to acquire the company eight years ago.
In a brief statement posted on its website, OTE declined to reveal any financial details of the ArmenTel-related proposals received by the Greek giant. Among the bidders that failed to pass its prequalification were transnational consortiums formed by the SIL Group of Armenian tycoon Khachatur Sukiasian and Armen Sarkisian, the London-based former prime minister of Armenia.
OTE, which is partly owned by the Greek state, decided to sell ArmenTel, despite the fact its Armenian subsidiary is apparently the most profitable of its domestic and foreign divisions. "OTE has decided to focus on the Balkans ... ArmenTel is now a healthy company ... and there is a rather large interest from Russian companies and funds," a top OTE executive, Michalis Tsamaz, explained in early April.
The international tender for ArmenTel is being handled by Britain’s HSBC Bank. Its final outcome has to be endorsed by the Armenian government which owns the remaining 10 percent of the operator.
ArmenTel posted last year a net income of 45.8 million euros ($55.4 million), an increase of 56.8 percent over the equivalent period in 2004, and had operating revenues of 119.1 million euros. By contrast, the Greek group as a whole posted a net loss of 216.8 million euros in 2005.
ArmenTel’s strong financial performance seems to have primarily resulted from 15-year exclusive rights to all forms of telecommunication in Armenia that had been controversially granted to OTE as part of the 1998 takeover agreement. The monopoly has been widely blamed for the poor quality of wireless phone and Internet connection in the country.
ArmenTel agreed in late 2004 to give up its exclusive grip on mobile telephony under a compromise deal cut with the Armenian government. The resulting emergence of a second wireless operator led to a dramatic increase in mobile phone use in Armenia.
The ArmenTel management has also been at odds with the government over the actual volume of its capital investments in the country’s phone network as well as its rising fixed-line phone charges.