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UCOM-Beeline telecom deal bolola / what's happening?

by ar_david_hh
from the 2020 April 10 daily new summary

There are 3 cellphone operators in Armenia: Beeline (aka ArmenTel aka Veon), UCOM (earlier purchased Orange), and VivaCell.

UCOM wants to buy Beeline.

Beeline trademark is being used by Veon-Armenia, which is part of European Veon. In other words, UCOM wants to buy Veon's "subsidiary" Beeline.

Sidenote: One of UCOM's shareholders is former HHK IRS chief Gagik Khachatryan, who is going through various felony investigations.


Cell phone market share:

VivaCell 58%, Beeline 25%, UCOM 17%.


Wireless internet market:

UCOM 32%, Beeline 30%, others 15%


Cable internet market:

UCOM 62%. They also own 94% of the fixed cellphone network.


Beeline wants to be purchased by UCOM citing financial problems. However, in 2019 they paid 12.2bln in taxes, which is 3.2x higher than in previous years (magic wand?). However, "paying taxes doesn't show their financial state."


Dec-2019: UCOM asks the Utility regulator for permission to buy Beeline.

Jan-22, Deputy PM Tigran Avinyan: Hold up. We must avoid monopolies. The ISP market will be examined first. The 3rd operator must be present in the market. The Utility Regulator is legally required to discuss mergers with NSS (National Security Services). We have the tools to prevent monopolies.

Feb-11, Regulator said: mergers are common when new technologies like 5G emerge. Despite some media rumors, Beeline hasn't asked us to block a 4th operator from the Armenian market. In 2008, the govt decided that a country size of Armenia needs only 3 operators, and distributed the radio waves to 3, and passed some laws.

(That 4th operator is A-Telecom, owned by a Russian businessman. The owner says he wanted to enter the Armenian market but some rogue government workers allegedly purposely let him down to defend the status-quo 3 telecoms. He claims there is a felony case around those govt agents.)

Feb-11: the Economic Competition Committee holds talks with Utilities Regulator. IRS was contacted. International experience was discussed.

Feb-11: UCOM director says the public will benefit from the merger. "It'll improve our capabilities. The same equipment can be used on both networks. We won't have to move money out of Armenia to purchase equipment..... There are no new subscribers, we reached a population limit."

Feb-13: Economic Competition Committee says they're still investigating. "If we don't find issues, one scenario is to allow a merger but require certain conditions. Give us 2 months to investigate."

Apr-9: UCOM's administration, including co-founders Yesayan brothers, resign after disputes with UCOM shareholders. UCOM was essentially "hijacked" by former IRS chief oligarch Gagik Khachatryan and Russian-Armenian businessman Samvel Karapetyan, a long time ago.

Oligarch shareholders wanted Beeline's director to manage UCOM after the merger. They held talks in private, without informing the UCOM directors about it, which raised their ire and prompted their resignation.

Several UCOM department chiefs also resigned. 560 out of 1650 employees have resigned. The Beeline-UCOM merger didn't go through today (at least not for now).

Apr-10: The Economic Competition Committee says whatever is happening, is an internal problem between the companies. The regulators haven't decided to approve or deny a merger yet.

Apr-10: High Tech Ministry opposes the merger. (other agencies are still discussing)


Who are UCOM's shareholders?

HHK Gagik Khachatryan and his family own at least 48% of shares. A highly secretive offshore Virgin Islands firm owns 29%. Russian businessman Samvel Karapetyan owns 10.5%. Another HHK MP owns 6%. The co-founders (who quit) own 6% combined.



Veon https://hetq.am/hy/article/112350















Armenian Telecom Firm’s CEO, Employees ‘Quit In Protest’

Ապրիլ 10, 2020

Narine Ghalechian

The chief executive and hundreds of other employees of a leading Armenian telecommunication company have reportedly tendered their resignations in protest against its majority shareholders’ plans to buy a rival firm.

The company, Ucom, owns one of Armenia’s three mobile phone networks and is also the country’s largest Internet service provider. It announced late last year plans to purchase the Armenian subsidiary of VEON, an Amsterdam-based operator partly controlled by a Russian tycoon.

VEON Armenia too provides mobile and fixed-line telephony and Internet services. Its Beeline wireless network is the oldest in the country.

VEON and Ucom appeared to have agreed the terms of the deal in December and have since been awaiting its approval by Armenia’s government as well as utility and anti-trust regulators. The authorities are understood to be looking into the proposed merger’s impact on competition in the domestic telecom sector.

A Ucom employee who asked not to be identified told RFE/RL’s Armenian service that the company’s executive director, Hayk Yesayan, resigned after it emerged that Ucom will be run by Beeline’s current Russian chief executive, Andrey Pyatakhin, if the deal goes through. At least 350 other Ucom employees also decided to quit in protest, claimed the source.

According to the source, Yesayan and his brother Aleksandr oppose Beeline’s takeover also because it would dilute their 6 percent stake in Ucom.

Ucom, which employs around 1,800 people, did not comment on this information as of Friday evening. Yesayan also did not make any public statements.

A spokeswoman for Beeline, Nara Nazarian, said Pyatakhin is “continuing to occupy his post and not planning to leave it.” “The deal [with Ucom] is still under discussion and we are not commenting on it,” she told RFE/RL’s Armenian service.

Asked whether Pyatakhin indeed wants to manage Ucom if Beeline’s takeover is cleared by the Armenian authorities, Nazarian said: “Such questions should be put to Ucom’s shareholders.”

Ucom is controlled by the extended family of Gagik Khachatrian, a controversial former Armenian finance minister who was arrested last August on corruption charges denied by him. Khachatrian’s two sons and a nephew own a combined 77 percent of its stock.

Late last month, the three men’s assets were frozen as part of the continuing criminal investigation into Khachatrian. The ex-minister’s lawyers condemned the investigators’ decision as illegal.

Meanwhile, Armenia’s Ministry of High-Tech Industry expressed concern about the controversy. In a statement, it urged the telecom operators and their workers to “display responsibility” and act in conformity with a coronavirus-related state of emergency. As part of the emergency rule declared last month, the government banned all strikes in the country.

The ministry also stressed that it is continuing to weigh up the proposed deal between Ucom and VEON and has not agreed to it yet.

A spokeswoman for Armenia’s Public Services Regulatory Commission likewise said: “The deal has not been concluded and is still being examined.”

Ucom’s acquisition of VEON Armenia also needs to be approved by another regulatory body, the State Commission for the Protection of Economic Competition.

Ucom’s mobile phone network was built and launched by the French telecom giant Orange in 2009. The Armenian company bought it from Orange for an undisclosed amount in 2015 after growing rapidly and becoming the country’s leading Internet and cable TV service provider. The Yesayan brothers are widely credited with turning Ucom into one of Armenia’s most successful businesses.

For its part, VEON paid $376 million to buy its Armenian phone networks 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.

Source: https://www.azatutyun.am/a/30546715.html