French Telecom Giant Gears Up for Armenia Operations

YEREVAN (RFE/RL)–The French telecommunications giant Orange said on Wednesday that it will launch Armenia’s third mobile phone network in the next several months and will seek to attract a “significant number” of customers with third-generation (3G) wireless services.

Its two Russian-owned competitors, meanwhile, insisted that they are undaunted by the prospect of facing Europe’s second-largest mobile phone operator in what is a very small market.

“We will launch our operations in the coming months,” Bertrand Deronchaine, a spokesman for Orange, told RFE/RL. “It is difficult to tell you when precisely that will happen.”

Orange, which is part of the France Telecom group, was declared last week the winner of an international tender for the right to launch and operate a third Armenian network. The company offered to pay 50 million euros ($68.5 million) for the license, outbidding two other European telecom firms short-listed in the government-administered contest.

Orange’s desire to expand into Armenia and become the largest Western company doing business there came as a surprise, given the small size of its economy and the volatile security situation in the region.

“We are operating in roughly 30 countries of the world, and not all of them are like France, the UK or Spain,” explained Deronchaine. “We are also operating in small countries that can be compared to Armenia.”

“It’s not only a question of size, it’s also a question of potential. We think there is potential in the Armenian market,” he said.

An estimated 2.3 million of the country’s 3 million residents already have mobile phones that are connected to two networks owned by the subsidiaries of Russia’s two biggest wireless operators, MTS and Beeline. The biggest of those networks, the MTS-owned VivaCell, claims to have 1.66 million subscribers. The other network is part of the ArmenTel national telecommunication company and goes by the name of Beeline.

According to Deronchaine, Orange feels it is capable of luring a comparable number of customers with “the best service at the best price.” “We hope to attract a significant number of customers,” he said. “In our operations we are not used to being well behind our competitors. We think that our success and growth will come parallel to the growth of the Armenian economy and that there will be more need for telecommunication services.”

Both ArmenTel and VivaCell said they welcome the Armenian government’s decision to further liberalize the wireless market and do not fear competition with Orange.

“It is not our style to fear competition,” Neycho Velichkov, ArmenTel’s director general, told RFE/RL. “So we are preparing to get better.”

“We have a variety of programs,” said Ralph Yirikian, the VivaCell chief executive. “But we will wait. Let them enter the market and start operations so we can see their style and approaches. Based on that we will decide what program to set in motion and how to respond to the third operator.”

In an interview with RFE/RL, Yirikian acknowledged that some of his company’s customers could switch to the Orange network. “But the third operator will also have to work hard to win a share of the market,” he said.

Both telecom executives said they do not expect price wars between their companies and the French operator, arguing that the wireless fees in Armenia have dropped significantly in recent years. “I they resort to dumping, we will respond accordingly and they won’t be better off,” warned Yirikian.

Deronchaine made clear, however, that in luring subscribers Orange will put the emphasis on the so-called 3G services such as video calls and broadband Internet connection. He stressed the fact that the license granted to Orange applies to not only GSM voice telephony but 3G. “We know that we will prevail in this market with new services,” he said.

ArmenTel launched 3G services recently. VivaCell is expected to follow suit before the end of this year.


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