Armentel Duel Escalates

A duel over the ownership of the Armenian telephone system is coming to a head, as the government seeks ways of wresting control of the network it controversially sold off five years ago.

On Monday November 26, a public meeting called by Armenia's ministry of justice will hear complaints about the telephone company, Armentel, and its owner, the Greek national telecommunications firm, OTE, and recommend steps be taken. The Armentel management has yet to confirm it will attend the meeting.

Official and public anger in Armenia is heightening, with ubiquitous complaints about high telephone costs, poor quality lines, limited access to the Internet and a mobile phone system that is one of the least developed in the world.

The Armenian government and Armentel narrowly avoided a showdown earlier this month over legal fees the phone company owed following a court battle in London in 1999.

Then OTE and the Armenian government were acting together against the former owner of the telephone network, Trans World Telecom. OTE promised to cover the government's court costs, but only settled the 1.5 million US dollar bill on November 8, four days before a deadline the authorities had set, when they threatened to start selling off Armentel shares.

Since Armentel was sold to OTE five years ago, the Armenian phone system has lagged behind those of its Caucasian neighbours. For example, just 50,000 Armenians currently use mobile phones - a much tinier amount than in Armenia's mobile-phone-obsessed neighbours, Azerbaijan and Georgia.

Nikos Georgulas, who was executive director of Armentel until last month, promised to double the number of users by the end of the year but that seems unlikely, given that many would-be users simply cannot get connected to the network.

Vardan Bagirian, who works for an international company in Yerevan, bought a mobile phone in June but has still not been hooked up. "Every time I complain to Armentel they promise the same thing - 'the telephone will be connected next week,'" he said. "But four months has gone by and I still don't have a mobile connection."

Karapet Avetisian, a builder, complained that "to get a mobile phone connection, you either have to go through very close relatives, who work directly in Armentel, in other words use the old Soviet 'blat' system, or simply pay for what you can get in a neighbouring country for free".

The management of Armentel says would-be phone-users are having to wait because the existing telephone system hasn't sufficient capacity for more subscribers.

But even if you manage to get hooked up, your problems are only beginning, customers say. The less expensive of the two ways of using the mobile phone system is to buy a so-called Easy Card for 14,000 drams (24 US dollars.) By doing so, you forego an initial connection charge - worth more than four times the cost of the card - in return for a restriction on the number of outgoing calls that can be made.

Actually laying hands on an Easy Card in Armenia, however, is not easy at all. It seems that they have all been bought up and are being resold at up to three times their value.

"Last month I bought an Easy Card on the street for my wife for 35,000 drams and I think I was unbelievably lucky," said Ohanes Akopian, a journalist. "Now I can't buy one for even 40,000."

The cost of a one-minute call using an Easy Card is the equivalent of 45 cents - an enormous sum for a poor country like Armenia. For users who give Armentel a down payment and monthly rental charges, calls cost about half as much - still more than in either Georgia or Azerbaijan.

Armentel was privatised at the end of 1997, when the country's president was Levon Ter-Petrosian and the premier Robert Kocharian, now president. OTE bought 90 per cent of the shares of the network on extremely favourable terms that give it a monopoly over the mobile phone network for at least the next 11 years.

Relations between Armentel and the government quickly soured after the latter tried, unsuccessfully, to introduce charges for local calls.

OTE says it has invested 140 million US dollars in Armentel up to the end of last year. But few believe this is the case. The current transport and communications minister Andranik Manukian openly declares that the company has broken its promises.

"About 150,000 citizens of Armenia are still waiting for new telephones to be installed, and Armentel is not yet in a state to guarantee acceptable quality of access to the Internet and mobile phones," the minister said on November 1.

Manukian said he doubted that Armentel would carry out its promise to digitalise the phone system and give 85 per cent of Armenia mobile phone cover by March next year. "The government of Armenia intends to deprive Armentel of its monopoly and is continuing to look for ways of achieving that goal," he said.

IWPR repeatedly contacted Armentel to respond to the allegations, but its main spokesman was either not available or away, while other company officials declined to comment.

Peter Magdashian is IWPR's Armenia coordinator.