State regulators have allowed the Amsterdam-based telecommunications company VEON to sell Armenia’s oldest fixed-line and mobile phone networks to a recently established Armenian firm.
VEON asked two Armenian regulatory bodies to clear the sale in early June one month after pulling the plug on the planned takeover of its Armenian subsidiary by one of its two local rivals, Ucom. The latter is also the country’s largest cable TV and Internet service provider.
Ucom was on course to buy VEON until being thrown into turmoil in April following the sncdalous resignation of its chief executive, Hayk Yesayan, and his deputy and brother Aleksandr. The brothers, who hold a nearly 6 percent stake in Ucom, tried unsuccessfully to buy the rest of the company controlled by the extended family of Gagik Khachatrian, a former finance minister arrested last August on corruption charges denied by him.
Gurgen Khachatrian, the ex-minister’s son heading Ucom’s board of directors, claimed later in April that the Armenian authorities are illegally trying to force the family to sell its controlling stake at a cutdown price. Khachatrian went into hiding in early May shortly after the National Security Service brought new criminal charges against him. He strongly denied them.
A few days later, VEON informed anti-trust regulators that it is pulling out of the planned deal with Ucom. The telecom company went on to reach a similar deal with the Yerevan-based tech firm Team set up by the Yesayan brothers.
The two entities asked the State Commission on the Protection of Economic Competitition (SCPEC) and the Public Services Regulatory Commission (PSRC) to clear VEON Armenia’s sale to Team. Both regulatory bodies approved the deal in separate decisions made on Thursday and Friday respectively.
“I think that we will bring the deal to an easy conclusion very soon,” Hayk Yesayan told RFE/RL’s Armenian service. He again refused to reveal how much his newly created company will pay for VEON Armenia, formerly called ArmenTel.
VEON paid $376 million to buy ArmenTel from a Greek firm in 2006. The company was headquartered in Moscow and known as VimpelCom at the time. Russian billionaire Mikhail Fridman’s LetterOne fund remains VEON’s largest shareholder.
VEON’s Beeline mobile phone network has the second largest number of subscribers in Armenia after the VivaCell network owned by Russia’s MTS operator. VEON Armenia is also a major Internet service provider.
The anti-trust regulators’ approval of the proposed acquisition was conditional on Team pledging not to lay off more than 10 percent of VEON Armenia employees for at least six months. Many of those employees are reportedly worried about losing their jobs as a result of the takeover. Some of them protested outside the PSRC offices in Yerevan on Friday.
Yesayan insisted that the new owners are not planning staff cuts or other layoffs. “We need them,” he said, referring to the telecom operator’s current workforce.
The regulators gave the green light for the deal despite strong objections voiced by the Ucom management. In a statement issued earlier this week, the company said that for almost a year the Yesayan brothers had negotiated with VEON in their capacity as top Ucom executives and exploited that experience to negotiate a similar deal for their new company in a matter of weeks. It claimed that this amounted to unfair competition.
Yesayan shrugged off the Ucom objections when he spoke to RFE/RL’s Armenian service on Tuesday. He also said he and his brother have yet to decide whether to sell their minority stake in Ucom.