/* ----------------------------------------------- Comment out annoying Snap... ----------------------------------------------- */

Monday, June 05, 2006

Lest we forget

In EuroTelcoLand, the average consumer is presented with a vast plethora of choices for mobile, internet and fixed line, but that was not always the case or is it the case throughout the world.

Today, I learnt that the Russia/CIS Goliath, MTS, is due to bid in the auction (no date set) of Armentel. I was quite surprised at this, because I seemed to remember that Armentel was bought back in the day by OTE, the Greek incumbent. So I did a little investigation…

The best article I found about the sordid history was one by the Jamestown Foundation.

• Armentel had a “mystery” investor when it was a public monopolist
• It was privatised in a non-transparent manner in 1997
• Arguments have ensued since about the level of investment in the company
• Services remain limited and beyond the economic means of the average Armenian
• A flourishing black market exists today for mobile sector, even for pre-paid top-up cards
• Under penetration especially compared to neighbouring states such as Georgia and Azerbaijan

I’m quite surprised because OTE has competed in other countries and has the necessary capital available to invest. Something smells that something is not quite right in Armenia. I can only guess the real reason why OTE has not invested in the country is because they just cannot see a way of getting decent economic return.

I hope that the re-privatisation goes smoothly and Armenia gets a modern telecoms infrastructure, but unless Armenia makes the necessary changes to the regulatory environment as well, I seriously doubt anything meaningful will happen.

In these days of European incumbents being relentlessly pummelled, perhaps we should consider the alternatives and remember that everyone needs an economic return to survive.