IT Landscape in Armenia
Telecommunication Environment
A monopoly provider, ArmenTel, dominates the Telecommunications Sector in Armenia. This company provides basic telephone services as well as cellular and international. ArtmenTel is owned by OTE (90 percent), and the Government of Armenia (10 percent). The monopoly position was established for a period of 15 years – beginning in 1998 when OTE acquired ArmenTel.
The only competition within the Telecommunication Sector is that there are at present, several Internet Services Providers (ISPs) operating within Armenia. For the most past there are within Yerevan, although some are now, and others have plans, to expand to secondary cities.
ArmenTel
The following background regarding ArmenTel is extracted from a recent publication from the Armenian Development Agency.[1]
ArmenTel was originally established in March 1995 as a joint venture between the Armenian ministry of Communications, which held 51 percent, and Trans-World Telecom Limited, a group of telecommunication service companies with businesses in the U.S. and Russia, which held 49 percent. ArmenTel owns all the main telephone assets in Armenia, Trans-World has contributed equipment and cash, valued at US $ 10.25 million.
In 1995, ArmenTel began rebuilding the basic telephone infrastructure for services to five major population centers in Armenia. It also invested in GSM and paging services and installed the first stage of a modern network management system, a management information system, and information and billing system.
In 1997 the Ministry if Communications appointed Merrill Lynch to advice on the further privatization of ArmenTel. Merrill Lynch ran a two-round international public tender for the sale, which was won by Hellenic Telecommunications public tender for the sale, which was won by Hellenic Telecommunications Organization, known as OTE of Greece. OTE is a full service telecommunications provider offering public telephony services throughout Greece where it is largest company in the country. The Greek State is its major shareholder (70 percent), and the remaining 30 percent are listed on the Athens and New York stock exchange.
In March 1998 OTE acquired a 90 percent stake in ArmenTel for US $ 142.47 million, buying out trans-world and most of the Ministry of Communications shares; the ministry retaining a 10 percent stake. By this time AmenTel was already providing most of Armenia’s telecommunications services including public switched telephone services, GSM, data transmission, cable television and paging switching services, under a license giving it exclusive fixed-service operating rights fro 15 years, and five years of exclusive GSM operations.
The new owner assumed ArmenTel’s US$ 43.0 million of supplies credits and agreed to invest US$ 300.0 million over 10 years, to lay 20,000 kilometers of fiber-optic cable, and install digital switching to provide services to 800 Armenian towns and villages. Digitalization will rise from 4 percent to 50 percent, leading to a dramatic increase in call completion rates. The aim is to reach the government’s target of national average teledensity of 20 percent by 2004.
The Armenian Development Agency report reflects hat at present, Armenia had approximately 580,000 telephones and an average teledensity (phones per 100 inhabitants) of 17 percent. Telephone revenues are placed at 2.3 percent of GDP, and expected to rise to 4.3 percent by 2005.