SCPEC: The reason for the merger of UCOM and VEON is a reduction in  costs

ArmInfo.The State Commission for the Protection of Economic Competition (SCPEC) of Armenia has adopted an application on the merger of the  telecommunication companies UCOM and VEON in administrative  proceedings. On February 13, after a government meeting, the head of  the commission Gegham Gevorgyan told reporters.

According to him, both entities justify their initiative by the need  to reduce the costs that have arisen as a result of calls from cell  phones to Internet communications, including through Viber. As a  result, both entities began to rapidly lose their subscribers. As a  result of this as Gegham Gevorgyan noted, their justification. The  final answer will be given based on the results of ongoing research.

To recall, on December 30, 2019, the companies turned to the SCPEC  for the Protection of Economics with a request for  concentration.   This, in particular, is about "Ucom's" intentions to  acquire 100% of  "VEON Armenia's" shares. According to the information provided, "VEON  Armenia" was founded in 1995, providing fixed, mobile  telephony and  Internet access services, equipment sales. In 2018, the  value of the  company's assets amounted to 147.8 billion drams, and  the amount of  revenue - 38.4 billion drams. Ucom is a company  registered in 1996,  providing fixed-line telephony, mobile telephony, broadband Internet,  IP-television services, and equipment sales  services. 

In 2018, the assets of the latter amounted to 115.9 billion  drams,  and the amount of revenue - 40.7 billion drams. According to   companies, the main purpose of concentration is to strengthen   substantial competition in order to provide more favorable conditions   for customers.  "While the decision has not been made, the commission  is still  analyzing the information received, today the first hearing  is being  held on this case. We turned to three government bodies -  the Public Services Regulatory Commission, the Television and Radio  Commission and the State Revenue Committee to understand the whole  picture and dynamics The Commission also considers such cases on the  international market, and also turned to international partners for  professional assistance, "said Gegham Gevorgyan, Chairman of the  SCPEC after a commission meeting and. He also explained that the  SCPEC has 90 days from the date of application to make a decision.   The Commission may decide to allow or prohibit the operation. Gegham  Gevorgyan assured that the process will be transparent, and if any  new information appears, it will be open to the public, with the  exception of information containing trade secrets.

To recall, the VEON Armenia company, which owns the Beeline brand,  officially announced negotiations with the Armenian Ucom company on  the sale of its business in the republic on its website. At the end  of December last year, it became known that Beeline in Armenia  applied to the Public Services Regulatory Commission in order to  obtain permission to sell its shares to Ucom. "These discussions can  either end in a sale or not. In accordance with regulatory  requirements, VEON will provide updated information if any," the  message said. " VEON Armenia" CJSC (Beeline trademark) provides fixed  and mobile communication services. Since April 2007, a 100% stake in  VEON Armenia CJSC (formerly ArmenTel CJSC) has been owned by Veon  Group of Companies, which is one of the world's largest integrated  telecom operators.