VivaCell Sold to Russians after All

VivaCell management announcing decision to sell to MTS,

Yerevan, Republic of Armenia © Ani Matevosyan, 2007

[17 September 2007 |ARKA – News] On September 14, the CIS largest mobile communication operator, “Mobile Telesystems” OJSC (MTS), announced the purchase of 80% of the authorized capital of the International Cell Holding Ltd., which is indirect owner of Armenia‘s leading mobile communication operator K-Telecom, with its VivaCell brand.
The option agreement on the purchase and sale of the rest 20% share of K-Telecom is to take effect no sooner than July 2010 to remain in force until 2012.
The transaction amount is, $310 mln, including $50mln to be paid to the seller during 2008-2012, provided that it ensures the targeted proceeds and revenue performance of the K-Telecom Company.
The MTS will also allocate a $140mln credit to K-Telecom to pay off the current debts and fund investment programs.
The K-Telecom CJSC covers Armenia‘s entire territory and is licensed for the GSM 900/1800 standard until 2019. By July 1, 2007, the company had had 986,000 clients, which, by the MTS’s estimates, is 66% of the market.

As with so many other deals of strategic importance happening in Armenia, the handover of VivaCell to Russians also happened with the minimum amount of transparency, under conditions of maximal secrecy, and with a timing, which just makes you wonder! (two months before President Robert Kocharian, which is gossiped to be the real owner of VivaCell is due to leave office). Onnik Krikoryan has more:

Now it appears that VivaCell’s sale can only raise further questions at a time when the Armenian president, Robert Kocharian, is rumored to be selling off his assets ahead of the election next year which will see him leave office. Under the Armenian Constitution, Kocharian can not stay in office for a third term.

2 thoughts on “VivaCell Sold to Russians after All

  1. Reply
    Onnik Krikorian - 17.09.2007

    From today’s RFE/RL’s Press Review:

    “In effect, yet another sector of the Armenian economy, telecommunications, has fallen under Russian control,” writes “168 Zham,” commenting on the sale of Armenia’s largest mobile phone operator, VivaCell, to Russia’s MTS. “As is known, the ArmenTel company already belongs to another Russian firm, Vimpelcom. To recap, the Russians also own Armenia’s energy facilities, the nuclear plant, the newly built Iran-Armenia pipeline, many industrial enterprises, a number of large Armenian banks and other strategic facilities.” The only thing they don’t yet own, it says, is the Armenian government.

    Some would disagree with the last sentence…

  2. Reply
    Observer - 17.09.2007

    They own the Armenian government all right, there’s no doubt to it!

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