News > UAE Armenians > UAE's telecom giant Etisalat may acquire 90 per cent of ArmenTel
Etisalat close to $450m telecom deal in Armenia
BY ISAAC JOHN, Chief Business Reporter of "Khaleej Times"
23 June 2006
DUBAI — UAE's telecom giant Etisalat, on an aggressive overseas buying spree spanning Europe, Africa and the Middle East, moved a step closer to acquiring 90 per cent of ArmenTel, the largest Armenian operator of cellular and fixed-line telephony, by getting short-listed yesterday for the final bidding round along with three consortia.
Greek telecom provider OTE, which owns 90 per cent of ArmenTel, said yesterday a consortium led by Etisalat is among the four bidders short-listed from the original eight bidders, including major Russian telecommunication conglomerates, Mobile Telesystems and Vympelkom.
The fourth bidder is a consortium comprising VTEL Holding and Knightbridge Associates.
The Etisalat-led consortium includes Dubai investment house Istithmar PJSC and Emergent Telecom Ventures.
When OTE announced its intention to sell 90 per cent of ArmenTel shares in early April 2006, primary offers came from Russia’s Sistema, Vympelkom, and Rostelekom, Kuwait’s MTS Kuwait, Armenia’s Sil group, Belgium’s Belgacom, Hungary’s PanTel, and Etisalat.
ArmenTel provides service to 595,000 fixed telephone subscribers in Armenia and controls over a half of cellular communication market, serving more than 50,000 subscribers. Armenian government owns 10 per cent of Armentel. The company’s turnover reached Eur 110 million in 2005.
According to sources close to OTE, the outcome of the tender would be known after July 20. Experts estimated the value of 90 per cent of ArmenTel shares around $200 million. However, indications are that the asset value may surge with Russian companies expected to offer $450 million for the Armenian operator.
Armenian sources said although Russian companies have more chances to win the tender "because they have more contacts and connections with Armenian officials, which is of great importance for working in Armenia, for the government strictly controls Armenia’s telecom market," Etisalat stands a better chance thanks to its financial clout and track-record for efficiency. "However, it seems all but certain that the company, in which the Armenian government has a 10 per cent share, will be sold to a Russian firm. Recent articles in the Armenian Press speculate that the government will not tolerate any other outcome. Certainly OTE’s experience in Armenia serves as a warning to potential investors of the danger in going against the authorities. OTE has spent several years fighting the government in courts in London over its alleged failure to meet investment conditions laid out in the 1997 agreement by which it first acquired Armentel," the sources pointed out.
Last week, a consortium led by Etisalat qualified for the final auction round for Egypt's third mobile licence scheduled for July 4.
The UAE telecom giant, which has finalised the $2.6 billion takeover bid for Pakistan Telecommunication Company Ltd. two months ago, is also bidding for a stake in Algerie Telecom, Algeria's state-owned telecom company, and is among the ten international companies that have submitted bids for the 800 million euro acquisition of some 70 per cent of Mobi 63, Serbia's largest mobile phone network. With all these acquisitions, Etisalat's overseas commitment is poised to exceed $10 billion soon.
Istithmar forms part of The Corporate Office comprising Dubai's Ports Customs & Free Zone Corporation and Nakheel, one of the largest developers in Dubai.