By Edik Baghdasaryan and Kristine Aghalaryan
hetq.am - 6/10/2015
For the most part, foreign companies control the telecommunications
sector in Armenia. They are international holding companies, companies
founded by the governments of other governments, as well as companies
registered in various offshore zones. Russian companies dominate this
sector, just like other economic sectors in Armenia.
Armenian government officials, both current and former, and their
relatives, own shares in the telecommunication sector. These shares
are hidden under a web of offshore companies.
Companies providing internet service in Armenia also supply telephone
service, both cellular and landline.
uses the internet. 40% of households own a computer and 35.6% of
these are connected to the internet. The picture will be somewhat
different for 2014 and statistics have yet to be published.
to Armenia: ArmenTel CJSC, K- Telecom CJSC, UCOM Ltd, GNC-Alpha Ltd,
and Armenian Datacom Company CJSC.
According to stats provided by Armenia's Public Services Regulatory
Commission, there are 71 companies providing internet service in
Armenia. As of December 31, 2014, the following companies were the
largest in terms of traffic and subscribers: ArmenTel CJSC, UCOM Ltd,
GNC-Alpha Ltd, K- Telecom CJSC, Orange Armenia Ltd, Web Ltd, Aranea
Ltd, Interactive TV Ltd, Arpinet Ltd, and Mylan Ltd.
regarding fundamental technical/economic criteria shows that ArmenTel
leads the way when it comes to people using the internet by means
other than their mobile phone network. The breakdown, in terms of
percentage, is as follows.
ArmenTel and K-Telecom were in the top five taxpayers' list for the
past five years. Starting in 2010, UCOM rose from 664th place to 55th.
taxpayers but not at the top.
web service, www.arminco.com, was established in 1993.
allowed customers to connect over land-line phone connections. In
the mid-2000s, other operators appeared in the market and the scope
of network accessibility increased.
minister of transport and communications in Armenia and currently
executive director of Armenia's Commerce and Manufacturing Chamber,
was in the midst of internet development in Armenia and says the
technology in the country wasn't late arriving. The problem, he says,
were the connections and the monopoly enjoyed by ArmenTel.
better in the first five years when there were no hindrances and it was
a labor of love. What followed were the meddling and government-private
sector monopolies that hindered development. During that period, we
lagged behind certain countries. The connection problems no longer
exist. Our problem today is content," says Mr.
inexpensive. Examining the proce offers of the operators, one can
conclude that 24 hour quality internet can be obtained for 5,000-8,000
AMD ($10-$18) per month; at speeds of 4096/2048 Gigabytes per minute
Mr. Aleksanyan is of the view that content must know be developed,
especially domestically and in Armenian. The internet ion Armenia is
of higher quality than some developed European countries
ArmenTel - Armenia's 1st internet provider
Armenia Telephone Company (brand Beeline) is the largest
telecommunications company in Armenia. In 1995, the Telephone Network
of Armenia (TWA) company and the Armenian-American ArmenTel company
were created on the foundations of the Inter-City Telephone Network.
government decisions and was merged with ArmenTel. Also merged
with ArmenTel was the Yerevan telephone network which operated as a
company, which at the time of its founding comprised 30% of the
connection with Armenia. As to the percentage of TWA became a part of
the property of the American company can be calculated from the sale;
from the profits derived. It was due to these decisions that ArmenTel
became the owner of such a big share of Armenia's communications
market. The above government decisions put an end to the shady
transactions begun in 1995. Levon Ter-Petrosyan was the president
of Armenia at the time of the transaction and Robert Kocharyan was
prime minister. ArmenDarbinyan headed the competition committee of
the ministry of finance.
In 1997, ArmenTel was sold to OTE, a company 89% owned by the Greek
government, at a cost of US$250 million. Some of that was to pay
back a $46.7 million loan to Siemens and the 10% shares owned by
the Armenian government. The Armenian-American TWT company and the
Armenian government received $142.47 million. (TWT got $62 million
and the government, $79.966 million)
341.9 million Euros) obtained ArmenTel shares fromOTE.
telephone service, as well as CDMA and ADSL internet connectivity,
throughout all of Armenia.
As of 2007, the company has continued to develop broadband internet
connectivity services via ADSL technology (HiLine). In March 2012 it
launched internet accessibility via FTTB technology (Hi-Line Optic).
In 2008, ArmenTel launched the first 3G cell network in Armenia.
According to the latest 2014 data, ArmenTel has 150,356 internet
subscribers in Armenia.
and headquartered in Amsterdam, is one of the world's largest
integrated telecommunications services operators providing voice and
data services through a range of traditional and broadband mobile and
fixed technologies in Russia, Italy, Ukraine, Kazakhstan, Uzbekistan,
Tajikistan, Armenia, Georgia, Kyrgyzstan, Laos, Algeria, Bangladesh,
Pakistan, and Zimbabwe. VimpelCom's operations around the globe cover
territory with a total population of approximately 739 million people.
"Infostrada" "Mobilink", "banglalink", "Telecel", and "Djezzy" brands.
Free Float (10.8%)
new Luxembourg based investment vehicle was set up to initially
invest into oil & gas and telecommunications opportunities but had
an unrestricted mandate allowing investment across virtually all
geographies and industry segments.
Three Russian businessmen control the lion's share of Alfa Group -
Mikhail Fridman, German Khan, and Alexey Kuzmichev.
Turkcell, the leading mobile phone operator in Turkey.
government. Telenor operates in 13 markets around the world - Sweden,
Denmark, Serbia, Montenegro, Malaysia, Bangladesh, Pakistan, India,
Thailand and elsewhere.
National Security Service (NSS) is now investigating the matter. Igor
Klimko, the ArmenTel's former director, is the top suspect. According
to Armenian press reports, a large portion of money paid to make
international phone calls to Armenia via ArmenTel from 2009 to 2012,
went missing. Such payments amounted to $20 million per month. All or
parts of these payments were being deposited into various off-shore
accounts rather than the company's. Over the three years in question,
some $500 million went missing. A search to locate the former director
is now underway.
threatening to sue. He alleges that an info war is being waged against
Russian citizens, painting them as thieves and robbers, in the public
eye. He says this is being done to divert the attention of people
from the real problems in Armenia and to conceal the "dirty deeds" of
certain individuals in ArmenTel and other companies. He says this is
being done to divert the attention of people from the real problems
in Armenia and to conceal the "dirty deeds" of certain individuals
in ArmenTel and other companies. Klimko doesn't go into details as
to who these individuals are.
at ArmenTel, was arrested in Belarus and extradited to Armenia in
the same case.
Sachkov is charged with cooking the accounts at ArmenTel and embezzling
funds for international calls while working at the company.
changed, he left for Belarus and later appointed as deputy director of
technology related questions at Velcom, a mobile phone operator there.
At the time Armenia's NSS had filed criminal charges against him. He
was arrested while attempting to flee Belarus for Austria. Sachkov's
lawyer says that his client accepts his culpability and is ready
company's name has surfaced in connection with the criminal activity
of Gyulnara Karimova, daughter of Uzbekistan's president. Using her
influence, Karimova is charged with accepting bribes in return for
granting telecommunications licenses in the country to companies
including VimpelCom. Vimpelcom and a parent company paid $176 milion
bribe to Gyulnara Karimova. The investigation was launched regarding
the company in Sweden, Netherlands and USA.
mobile phone and internet services under the brand name Viva-Cell,
ArmenTel began losing its monopoly position it enjoyed for years.
Today, Viva Cell MTS is the second largest internet provider
in Armenia. By the end of 2014, there were 1,052,398 people were
accessing the company's internet services via mobile phones. 82,700
were accessing the internet via the company's broadband service
(including connections via wireless equipment)
VivaCell operates its own trunk line network that is plugged in to
the Georgian "Caucasus" transit operator networks and Rostelecom
In 2002, the Fattouche Investments Group of Lebanon spearheaded the
creation of Karabakh Telecom in Artsakh - the country's only mobile
and internet provider. In 2004, the family founded K-Telecom and
started business as a mobile operator in 2005 under the VivaCell brand.
via Investigative Dashboard, KT (Holding) SAL, a company registered
in Lebanon, is the 100% owner of K-Telecom. International Cell
Holding Ltd., registered in the British Virgin Islands, is the major
shareholder of KT (Holding) (29998 shares). The minor portion of shares
(2 shares) is controlled by Artem Vasiliev and Pavel Masharov, two
management officials at Mobile TeleSystems OJSC (MTS), the largest
mobile operator in Russia and the CIS.
is a 100% indirect owner of the largest mobile operator in Armenia -
CJSC Â"K-TelecomÂ" (trademark VivaCell).
The acquisition price was EUR 310 million, including EUR 50 million to
be paid to the seller within three years - from 2008 to 2010 - provided
that the targets set in revenues and profitability of the company
K-Telecom. MTS also provided K-Telecom a loan of 140 million euros
for the repayment of existing debt and finance its investment program.
An option agreement to acquire the remaining 20% stake K-Telecom was
Yirikian stated that the Fattouche Group still owns a 20% stake in
International Cell Holding Ltd.
According to the Lebanese State Registry, the Fattouche Investments
Group is owned by the brothers Pierre and Mosa Fattouche (50% and 49%
respectively) and 1% by Rashid Hovsep Abu Shakran.
Pierre and Mosa are brothers of Lebanese parliament member and
minister Nicolas Fattouche and their business interests are varied,
including projects won via government contracts.
Let's now turn our attention to the owners of Russian MTS. According to
its website, the free float of the company's shares is approximately
48.54%. MTS is 51.46% majority-owned by Sistema JSFC, the largest
publicly-traded diversified holding company in Russia and the CIS.
companies. Its portfolio comprises stakes in predominantly Russian
businesses in a range of sectors, including telecommunications,
utilities, consumer, high tech, healthcare, pharmacy and others.
company's board of directors since 2009.Kocharyan, in compensation,
owns a 0.0052% stake in the company as of July 2014.
Vladimir Yevtushenkov owns 64.1% of shares in Sistema and serves as
the board's chairman. In September 2014 he was placed under house
arrest on charges of embezzlement and legalization of the company's
shares. He was freed from house arrest in November 2014.1 9% of
Sistema stock is traded on the London Stock Exchange.
ADC Internet - Sedrak Kocharyan and the deputy head of the Real
is involved in the beginnings of the Armenian Datacom Company. So too
was Artak Zakharyan, (a former judge and the son of Yervand Zakharyan,
Armenia's Minister of Energy and Natural Resources). Finally, there
was Khajak Karayan, deputy to the president of Armenia's State Real
founded in April 2006. A year later it entered the market providing
broadband internet services targeting the corporate sector. Its
website says the company has 1,299 subscribers (690 individuals and
609 legal entities).
In 2010, it purchased the assets, valued at 734.678 million AMD,
of Fibernet Communications Ltd.
year VTB-Armenia petitioned the courts to have ADC declarted bankrupt
in order to recoup a US$4 million loan plus penalties. Yerevan's
Arabkir and Kanaker-Zeytun Court of jurisdiction sustained the petition
and declared the company insolvent on November 28.
According to Karen Sargsyan, ADC's Director of Business development,
the verdict was designed to restructure the company's financial health
and would not affect shareholders or investors.
"Given our charter, these two processes are running concomitantly. In
other words, for financial health to be restored, we are obligated
to go to the courts and be declared insolvent so that our financial
obligations are put on hold for a certain period. Reaching an agreement
with the bank, we went that route," says Karen Sargsyan.
Who are the shareholders of Armenian Datacom Company?
Officially, ADC has one shareholder - the Norwegian registered ADC
Holding AS. Sedrak Kocharyan is a board member and Khajak Karayan is
the board's president.
According to a document retrieved via Investigative Dashboard from the
Norwegian Corporate Registry, the main shareholders of ADC Holding AS
are Cupizinco Holdings C. LTD (37.65%), Yerevan Telecom CJSC (23.21%),
and Telesto Norge AS (3.01%).
2014. While regarded as one of the richest judges in Armenia, he
never declared dividends from Yerevan Telecom for many years)
Global Soft, a company registered in Armeniaonce owned the remaining
37%. It now owns all the shares in Yerevan Telecom.
Dialog (5%). Khachikyan is also a member of the ADC Holding AS board
of directors. Khajak Karayan, deputy to the president of Armenia's
State Real estate Cadastre, once owned 47.5% of Global Soft shares
but unloaded them in 2013. (When Yervand Zakharyan served as the head
of the Cadastre, Karayan was his advisor and later became the deputy
president. Karayan still serves on the board of ADC Holding AS)
Karayan confirmed to us that he was a founding member of ADC but says
that he no longer has any connection to the company. "I'm engaged in
other things. In the first place, I have no right, but I can advise
you regarding the sector if you're interested," said Khajak Karayan.
that he should rip up that document confirming that he was president
of the board of directors. He says that the board hasn't been active
for a long time. While Karayan claims that he sold his shares two years
ago and has no connection to the company, it was evident from our talk
that he is quite well informed regarding the company's activities. "I
looked into it. I know. What do you want with that company? It's in bad
shape now. It wouldn't be desirable for me to expound," said Karayan.
Karayan. "Vahe Khachikyan is an old school buddy. I'm a good friend
of his," Karayan confided.
Cupizinco Holdings C. LTD, which owns 37.65% of ADC Holdings AS, is
in turn owned by The Amicorp Group; a worldwide network of companies
that specializes in entity management and financial services. Amicorp
specializes in managing companies in the secretive offshore realm. A
team of lawyers runs Amicorp and the company's shareholders is not
public knowledge. Some of the companies it manages have been implicated
in money laundering and tax evasion cases. Amicorp Netherlands Holdings
B.V. was embroiled in a case involving former Indonesian dictator
Suharto. It seems that Amicorp managed the business dealings of the
Suharto family and earned the $15 million in profit.
family of Snorre Osvald Bentsen.
with ADC in January 2009. The company promotes itself as a leading
advisory and investment firm specialized in the telecoms, media and
digital (TMD) industry with a global reach. It has offices in key
hubs in the United Arab Emirates, South Africa, Spain, Singapore,
Colombia and the United States.
and the rehabilitation begun. We also wanted to know whether had any
legal modifications been made as a result (name/registry changes,
etc.), and whether there had been changes to the list of shareholders
after the rehab process. The company refused to answer.
We weren't able to speak to Nerses Voskerchyan, director of Global
Soft, the shareholder here in Armenia. We then left a post on his
Facebook page about a possible interview. There was no response.
Ucom - Unknown shareholders: from Gagik Khackatryan to the Virgin
People point to Gagik Khachatryan (Armenia's current Minister of
Finance and former State Revenue Committee Chairman) as the owner of
internet provider Ucom in Armenia. He's periodically denied the link.
Khachatryan told A1+ TV. He's also denied having any stake in the
company. "I don't own any business. Prove otherwise."
Gagik Khachatryan was appointed finance minister in April 2014. Before
this, he served as the State Revenue Committee Chairman from 2008.
government salary. However, his financial disclosure filed when he
was appointed minister shows millions of dollars in cash holdings. In
April 2014, when he took the job, he declared $2.5 million in the
bank, whereas his annual salary only amounted to $21,000. As assets,
he also listed five mature saplings, a private house with acreage
and commercial structures, and two apartments.
So what links Gagik Khachatryan to Ucom?
Ucom (Universal Communication) was founded in 2007 and started
operating a bit later. It offers broadband internet, IP television and
fixed telephone service. As of March 24, 2015, it had 67,303 internet
subscribers. The company enjoys a 26% share of the country's fixed
internet market. Overall, it has a 13% share of the fixed and mobile
internet market in Armenia.
out in the provinces.
company shareholder was Armen Nazaryan, the son of Gagik Khachatryan's
aunt. There have been four shareholders as of 2011. General Director
Hayk Yesayan and his brother Aleksander (who heads the company's
external affairs department), each own a 5% stake. 41% is owned
by Aram Khachatryan (a cousin of Armenian Finance Minister Gagik
Khachatryan). 49% is owned by Cyprus registered IU Telekomunicate Ltd.
This company is wholly owned by Darison Management Ltd., registered
in the British Virgin Islands, an offshore location known for its
secrecy. It's a favorite haven for officials wishing to hide their
owners IU Telecomunicate, he responded, "It's a foreign investor." He
avoided answering from what country and what was the investor's name.
"Naturally, they are individuals. But since I am the business director
and have nothing to do with it. I cannot say," Barseghyan replied.
owner. No reply was forthcoming. These foreign investors would haredly
have a reason to remain secret, but the 'key' to the millions owned
by Gagik Khachatryan, nevertheless, is also to be found in the Virgin
Island registered company.
The cash holdings of Gagik Khachatryan grew in parallel to the
development of Ucom. According to an official list of taxpayers in
Armenia, 2011 proved to be a break-out year for Ucom. As of 2011 the
company's market position improved greatly. In 2010 it was listed as
the 664th largest taxpayer. By 2014, its position had soared to 55th.
2011 was also a banner year for Gagik Khachatryan. According to his
2009 financial disclosure, Khachatryan had 54 million AMD (US$113,000)
in revenues. In 2010, his disclosed revenues amounted to 59 million AMD
($124,000). His revenues shot up the following year when he served
as president of the State Revenue Commission. While he declared no
real estate or other transactions, other investments or securities,
his overall financial holdings shot up several times. At the close of
2011, Khachatryan declared cash holdings of 278 million AMD ($600k)
and another $3 million. His only declared revenue for the year was 8
million AMD ($16k) in salary. In 2012, he declared $3.6 million and
$3.5 million in 2013.
>From 2011 to 2014, Khachatryan's wife Laura Yepremyan also
periodically declared $3.2 in cash - this for a person whose only
source of income was allegedly her salary.
Based on Hetq investigations, Armenia's Transparency International
Anti-Corruption NGO petitioned the State Ethics Committee for Top
Government Officials in 2012. The NGO wanted the Committee to look
into a possible conflict of interests regarding the business interests
of the State Revenue Commission president and his duties.
The Committee found no such conflict of interest despite proving that
the children of Gagik Khachatryan were shareholders in MegaMotors
and Apeeron. It also found that his cousins were shareholders in the
companies Megafood, Ucom and Chronograph.
officer, Francis Gilbert, was asked why Orange decided to sell and
leave the country.
Orange had provided wireless broadband internet via H+ radio links.
According to the company's 2014 year-end report, it had 130,725
broadband internet subscribers (not counting users via telephone).
via H+ radio links. According to the company's 2014 year-end report,
it had 130,725 broadband internet subscribers (not counting users
Group (France TÃ©lÃ©com S.A.), which was founded by Orange
Participations SA . A major shareholder of Orange Group is the
FondsstratÃ©giqued'investissement) - 13,5 %, the French government -
13.45%, Orange employees - 4.81 %, and the company - 0.58%.
Gilbert said Orange could not offer the increasingly popular consumer
option of packaging four services for one price: cellular connection,
landline connection, landline internet and cable television.
He said the salewill allow Ucom to corner 20 percent of market share
while providing such a package.Orange's market share was so small
that it had lost about â~B¬ 185 million (US$ 207 million) in recent
years and did not see realistic opportunities for growth, he said.
telephone, internet, and new generation IP TV services to private and
corporate customers in Armenia. As of December 31, 2014, Rostelecom
(Armenia) had 26,208 internet subscribers.
infrastructure covering 80% of the territory of RA and spreading for
over 3000km. It is connected to region's main terrestrial networks
and largest traffic exchange nodes as well as international channels
of Iran and Georgia.
GNC Alfa was founded in 2007. The founder and sole shareholder was
ArmenMelik-Santurdichyan. The company quickly reorganized and became
a closed stock company. The shareholders also changed.
The company entered the market in 2012 when Rostelecom purchased 75%
of GNC Alfa's stock; in one share. According to a company statement,
Rostelecom paid $22.5 million for the stock. With this purchase
Rostelecom expanded its operation outside Russia for the first time
and enlarged its network; connecting the Persian Gulf overland with
Europe. This was a strategic move for Rostelecom.
company's shareholders. "Rostelecom OJSC is the shareholder of GNC
Alfa," Faramazyan replied.
In reality, the picture is different and Faramazyan concealed the
facts. The company's stock now belongs to Filor Ventures, a company
registered in Cyprus. Filor Ventures has two shareholders - Bovlon
Investments Ltd. (25%) and Rostelecom International Ltd. (75%).
Rostelecom OJSC. And Rostelecom's largestshareholders are various
Russian government agencies - Russian Federation represented by
Federal Agency for State Property Management (Rosimushchestvo) -
43%; National Settlement Depository (NSD) -42%; Vnesheconombank -
3.8%, and the Russian Direct Investment Fund (RDIF) (Controlled by
Vnesheconombank) - 1%, Rostelecom - 6.8%, Mobitel- 12%:
We again contacted Hayk Faramazyan as to who owns the remaining 25%
of GNC Alfa. "...Please tell us who is/are the shareholder(s) of
Bovlon Investments Limited," we wrote to Faramazyan.
"100% of the shares are owned by Filor Ventures Ltd. Rostelecom OJSC
controls shares," again answered Faramazyan.
liability companies. - Interactive TV, Aranya, Arpinet, Maylan and web.
broadband internet to the entire Ararat Province of Armenia. It has
three shareholders - the brothers Andranik and StepanMinasyan, and
IP television to private and corporate customers. The sole shareholder
is Grigor Babakhanyan.
Mylan Ltd. is registyered in Vanadzor and provides internet to Lori
Province. Armen Merdjanyan is the shareholder.
Ruben Mkrtchyan. It was founded in 1996 and now has 1,265 subscribers.