Russian news agency announces ‘winner’ of ArmenTel tender

27 Jul 2006

The Russian news agency ComNews says that a consortium formed by VTEL Holdings of India and Knightsbridge Associates, and also thought to include Russia’s Sistema Group, will become the new owners of Greek telco OTE’s 90% stake in Armenian fixed line operator ArmenTel. According to people familiar with the deal, the Russian company will take control of ArmenTel’s fixed line operations while the Indian-Armenian consortium will assume responsibility for its mobile communications business. The Greek company has promised to announce the outcome of the tender in late July/early August.

OTE announced its intention to sell 90% of ArmenTel shares in early April 2006. In early June Sistema, Rostelecom, and Vimpelcom joined the hunt to buy the company, joining five other operators, MTC Kuwait, Armenia’s Sil group, Belgium’s Belgacom, Hungary’s PanTel, and Etisalat of the United Arab Emirates. On 23 June OTE whittled down the number of companies it would allow to bid from ten to four, namely: Vimpelcom, Mobile TeleSystems (MTS), a consortium of VTEL Holdings and Knightsbridge Associates, and another consortium backed by UAE-based Etisalat.

ArmenTel provides services to 595,000 fixed line customers and controls over half the country’s cellular market, with more than 50,000 subscribers. OTE is pulling out following a disagreement with minority shareholder – the Armenian government – over the planned business strategy for the company. The state is said to be opposed to plans to raise tariffs.