ArmInfo. The communications market of Armenia ceases to be part of the world telecom and is locked within its small borders. The news published in the media that MTS following VEON is going to leave Armenia is depressing.
On the one hand, the country is literally left without the attention of transnational corporations and this is a serious <application> for international investment isolation.
On the other hand, market experts believe that the departure of such companies is understandable, as from the point of view of business it is completely justified. From the point of view of telecommunication services, the Armenian market is oversaturated, company revenue is falling, profitability is falling, and, as you know, you can't jump above the ceiling. About what is happening on the market today, ArmInfo economic analyst asked to share with the ex-director of the Armenian stock exchange of Nasdaq Armenia, investment adviser Armen Melikyan.
- Before you talk about the current topic of VEON Armenia purchase, please comment on the information on preparations for the public sale of VIVA Cell - MTC. And in general, what kind of line was lined up for leaving Armenia? Let me remind you that six months ago, the possibility of leaving our market was announced in Rostelecom.
The announcement of VIVA Cell - MTC through the press on the public sale of shares suggests that the deal will be open, public and against the background of what is happening with the deal with VEON Armenia, where we do not know who is buying the country's largest telecommunications company, it looks more I would say decent. And this is more acceptable from the point of view of foreign investors evaluating both the country and the company itself, which sells its shares. I constantly communicate with investors and I can say that today they are very concerned about what type of transaction will be carried out by VEON Amsterdam, since there is concern that this multi-stage transaction with hidden beneficiaries may create tomorrow for a listed on international stock There are certain problems in the company's markets, such as when facts of the existence of closed agreements with certain authorities in Uzbekistan were revealed when the company left this market.
- That is, do you think that such transnational companies quoted on Western stock exchanges as VEON should be careful in choosing the so-called counterparties for transactions?
Of course, and this concern I read today in investment blogs. There are different points of view regarding the deal to sell VEON its shares to TEAM, which is unknown to anyone, primarily because it is unclear who is behind the Yesayan brothers, the founders of this company, which was created only a month ago, and whether certain <corruption traces> will be revealed tomorrow in Uzbekistan, and, secondly, concern over the Yesayans themselves, who over 10 years ran the company owned by the most corrupt official in Armenia and led it exclusively at a loss. This is more than strange, since other telecom operators worked, maybe not with superprofits, but nonetheless, they profitably paid the state profit tax. If you study the financial statements of UCOM well, it becomes clear that the company's loss-making was achieved, apparently, intentionally. It is possible, because I am not a judge and I can't say anything, but probably this could not have happened without the knowledge of the UCOM top management, that is, the same Yesayanov brothers. Moreover, there is unverified information so far, and it revolves around investment blogs that they are currently investigating the money laundering case, and if this information is confirmed tomorrow during the investigation, then foreign investors will be seriously disappointed.
- By the way the antimonopoly authority conceals information about the final beneficiaries of the transaction, about its so-called multi-layer mechanism for purchasing VEON Armenia, it actually does not become very comfortable. After all, this is not just about the largest mobile operator, but about the operator who owns the entire communications infrastructure in the country, the infrastructure that was built and put in place to please the state and its security back in Soviet times. This is a huge asset directly related to state security. I remember the same dark story with the sale of this infrastructure to some obscure, suitcase company in the early 90s and how millions later made it into it, reselling it to the Greeks. And how much then the country lost from this Greek monopoly and mediocre and thieving management. Where are the guarantees that the story will not be repeated?
There are no guarantees, since in this case we are also dealing with an unknown real buyer. Yes, it is possible that some Armenian bank will issue money for the purchase of VEON Armenia and become the guarantor of the transaction, having received from the foreign partner bank and the real buyer as collateral the entire infrastructure of the company, but where is the guarantee that the company will be profitable and work will be without gray circuits? VEON Armenia had such guarantees, if only because it is the daughter of a large international company with a high level of capitalization, whose shares are listed on European exchanges, and which works by all international standards and is very worried about its reputation. Now there is a risk of being, as they say, in the paws of the <gray mouse>, about which nothing is known. This, after all, is a strategic area of importance, not a casino, and, figuratively speaking, not a candle factory, which you can take and sell to someone without getting into it. Look, literally the day before there was a voltage drop and a third of the country was virtually left without UCOM services. This is unacceptable, in principle, because any such company should have several levels of protection against various force majeure cases, not to mention the usual power supply. Perhaps this happened because the Yesayans, having left UCOM, "persuaded" almost the entire technical staff to leave the company with them, promising them shares in VEON Armenia or because this entire security system was simply not properly built during their management and did not work. Are there any guarantees that, by heading VEON Armenia tomorrow, all this will work clearly? But what if the story with UCOM repeats itself here in a few years? And the state will calmly look at it from the side?
And still the main thing for the world investment community, I repeat, these are not problems within Armenia, but the problem of a clean deal. Until I see this. And investors are worried about this.
- Good, but do not you think that in the case of VEON Armenia, the state could ensure the purity of the sale. For example, to buy out a blocking block of shares of 25% + one share and sell the rest on the open market. This is a profitable company and I have no doubt that the deal would have passed with a bang.
You are absolutely right. And many blog investors are asking this question - why sell a profitable and strategically important company to someone, if you can ensure a clean transaction through an IPO in the domestic market, while limiting the possibility of acquiring a controlling stake in one or two investors. In the end, such a deal could give a very powerful impetus to the development of an organized stock exchange market in the country, which we all are talking about, and not only us, but also foreign institutional investors - donors who have long been talking to the Armenian authorities. And they, including the new Armenian revolutionary authorities, remain deaf to such calls, not understanding the full economic and social importance of such steps. Apparently, someone's interests prevail over state ones. It cannot be explained otherwise.
As you remember in a previous interview, we discussed this topic, the topic of public sale of shares of infrastructure companies to the public. This would greatly spur interest in investing in the economy of domestic savings, which both the middle layer of the population and wealthy people who have nowhere to invest available funds except in residential real estate, the economic effect of which is largely inferior to the stock market. I expressed the idea that the municipal economy represented by the same company for sanitary garbage collection, which is also quite profitable, could be put up for an exchange auction and started developing not as a department of the city hall, but as a separate joint-stock company, bringing It has new technological innovations, including in terms of sorting and recycling. Unfortunately, the ambitions of the city authorities were won and officials, in fact, did not want to share these working and profitable assets with the population.
- Back to the topic of telecommunications. How do you see the further development of the market in terms of consolidation? Could one telecom operator remain in Armenia tomorrow?
You know, theoretically this is possible, although practically the same. This is beneficial to the investor, although not beneficial to the public. Here we are dealing with a clear conflict of interest between the owner / s of the company and the public. The fact that we will have to part with many cheap tariffs for certain cellular and Internet services that the French Orange left us gave us is clear. As you can see, many tariffs of the French operator are already in the past, they continue to be used by those who are really lucky and are not canceled just because they are afraid of losing their old Orange clientele. Perhaps after the purchase of VEON Armenia, very bad processes will begin on the market, to put it mildly, that will force them to sell their shares of VIVA Cell-MTC or even UCOM. Because in the conditions of weak state control, TEAM, which had absorbed VEON Armenia, which by then owned the main market infrastructure, could gradually force its competitors to backtrack and, to put it mildly, to sell. It will be enough to work somewhere for dumping, and somewhere to increase the payment for traffic and the antitrust authority, even with all the will, as experience in other industries shows, will not be able to contain the situation.
- Then, it turns out that we can return to the situation with the Greek "ArmenTel" of the second half of the 90s?
To a similar situation, the world is still developing and today you won't surprise anyone with the Internet, but the question is how much you will have to pay for it and how it will interact with the state's concept of priority development in the country of high technologies.
- And how to avoid this?
There is only one way, and I am convinced of this. To put companies on the stock exchange, open them, buy out blocking blocks for a time by the state, nothing more, and place shares among the population. Until the population participates in the income of good businesses and does not create the best exchange practices in the country, bona fide investors will not come to us, neither strategic nor portfolio ones. Too many risks. The new government should neutralize them, on the one hand, and on the other, create conditions for the population to receive additional opportunities by participating in large and infrastructural businesses, receive dividends from them and pay taxes from them. A citizen should have a chance to participate in the distribution of profits and as a shareholder in the management of large companies. This is the only way he will join the country's governance system, as the new government speaks of, poorly visibly presenting all the tools of this process, and only this way the foreign investor will believe us not in words but in deeds.
P.S. When the material was already published, VIVA Cell - MTC told ArmInfo that the information about the sale of the company's shares was fake and that the company's shareholders did not have such plans. Unfortunately, ArmInfo fell into fake news of their colleagues. The problem is that responding to such misinformation would probably be more broad and quicker. Nevertheless, despite this, the topic of an interview with an investment specialist, in essence, remains quite relevant.
