Armenia Silent as Telecom Sale Announcement Nears

YEREVAN (Reuter)–The Armenian government is due to announce in less than a week which company–almost certainly foreign–will take a controlling stake in the former Soviet republic’s profitable international telecoms company–Armentel.

Yet details of the bidding which closed on August 15 remain scarce and officials in Yerevan–where privatization plans have run into opposition from nationalist politicians–were unable to say exactly when an announcement may be made.

"The final decision of the government will be announced after September 15," Anaid Simonyan–a spokesman for Finance Minister Armen Darbinyan–told Reuters on Wednesday.

The government gave itself a month from the close of bidding to name the winner of Armenia’s biggest single privatization.

But last week it said it had asked the three bidders to submit revised proposals–leaving it unclear whether a final decision would be announced by next Monday. Darbinyan will be in Hong Kong for the IMF/World Bank annual meetings next week.

The identity of the bidders is being kept secret but Greek telecoms group OTE says it and France Telecom have made a bid–while US–British–South Korean and Danish investors have also been reported to be interested.

Armentel is the first and biggest sale among a high-profile series of Armenian privatizations announced this year.

As such–investors are studying the conduct of the Armentel sell-off as a test of the government’s commitment to attracting foreign capital–a commitment that is not without its critics–including within the state administration.

Levon Ter-Petrosyan–re-elected a year ago–approved the sale of 11 large state firms as way of attracting investment into Armenia.

The privatization plans were welcomed by the International Monetary Fund–whose credits have kept the government afloat by covering a budget deficit which stood at 33.9 billion drams ($68 million) last year.

But conservative politicians have criticized the offers–calling them a sell-out of Armenian interests to foreigners.

The precise size of the Armentel stake on offer is not clear but it will give control to the winning bidder.

The government originally said it was offering its entire 51 percent stake. US company Transworld Telecommunications Inc. took 49 percent in 1995 but government adviser Merrill Lynch said at the time of the offer that Transworld would be selling its stake.

Handling international and some domestic communications for the Caucasus nation of 3.5 million–Armentel reported profits of $8 million last year and Merrill Lynch forecast that would increase nearly fivefold this year to $37 million.

OTE–which has had previous dealings with the Armenian telecoms sector–has made a bid with France Telecom for 90 percent of Armentel–OTE’s head of international projects–Vasilios Manglaras–told Reuters in Athens.

Mangalas declined to give details of the bid–but Greek newspapers have said OTE leads a consortium seeking 90 percent of Armentel–51 percent for itself with 39 percent to be divided between France Telecom–Greece’s Hellenic Bottling Co. and the European Bank for Reconstruction and Development.


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