ECONOMY

OTE in talks with Ros Telecom to sell stake in ArmenTel

Talks between Greece’s OTE Telecom and Ros Telecom on the sale of OTE’s stake in ArmenTel are at an advanced stage. OTE acquired 90 percent of ArmenTel, Armenia’s telecommunications monopoly, as part of its international expansion strategy, in 1998, for $146 million. The Armenian Ministry of Posts and Telecommunications holds the remaining 10 percent. Since acquiring the company, OTE has invested over $70 million in the company. However, since late last year, it has actively sought to sell the company, as Kathimerini revealed last November 12. This appears to be a complete reversal of a strategy once justified by invoking geopolitical arguments. But OTE wishes to extricate itself from Armenia as soon as possible and also to avoid being enmeshed in scandals in which some of ArmenTel’s top executives appear to have played a questionable part. OTE’s disentanglement from Armenia will have a high cost; in any case, it is most unlikely to recover the $220 million it has spent on buying the company, then investing in it. The Russians may be keen to re-establish their presence in the former Soviet republic, but are offering far less than $220 million. Sources say that last week two OTE International managers – Vassilis Fetsis, once tipped as ArmenTel’s next chief executive officer, and G. Mavrakis – had flown to Moscow to negotiate with Ros Telecom executives. Other sources revealed that, a few days later, a top manager of telecommunications equipment firm Intracom – OTE’s, and Armentel’s, favored supplier – also went to Moscow to hold talks with Ros Telecom executives. However, the content of these talks is not known. It is said, nonetheless, that this particular meeting was brokered by a former Armenian minister, who has become a major ArmenTel contractor. At this critical juncture, ArmenTel itself is riven by internal feuding; revenue is undermined by «pirate» operators with good connections in Yerevan, Armenia’s capital. A central person in these feuds is Deputy Chief Executive Officer Giorgos Vassilakis, who has, so far, managed to see off five CEOs. At present, the CEO position, and one place on the five-member board, have yet to be filled. By allying himself to various Armenian government officials, Vassilakis is trying to pass through as many procurement contracts as possible. This has led ArmenTel’s chairman of the board, and Executive Vice President of OTE International Vassilis Maglaras, to warn Vassilakis, on April 14, «not to sign any binding documents, procurements, contract extensions, or significant administrative decisions without prior communication with me.»