MTS Armenia sale transaction terminated due to national security  reasons

ArmInfo.MTS Armenia Telecommunications company will not be sold, the Public Services Regulatory Commission (PSRC) of Armenia intends to reject the  company's application for permission to conclude a transaction to  transfer control over the communications operator.

As noted on the website of the Regulator, a meeting of the commission  on this issue is scheduled for April 12. 

As stated in the draft decision, on January 26, 2023, MTS Armenia  CJSC submitted an application to the PSRC, according to which Fedilco  Group Limited (registered in Cyprus) wishes to purchase from  Allegretto Holdings LLC (registered in Luxembourg) its 100% stake  "Aramayo Investment Limited" (registered in Cyprus). It is also noted  that in view of the fact that Allegretto Holdings LLC belongs to the  Russia - Mobile TeleSystems Public Joint Stock Company ("MTS" )-  Russia's largest mobile operator (registered in the Russian  Federation), as a result of this transaction, the company will cease  to be a member of the MTS Group.  However, the Ministry of High-Tech  Industry, in response to a request from the PSRC dated February 2  this year, on March 30 stated that the issue was discussed with the  interested departments of the Republic of Armenia, as a result of  which the ministry, within the powers entrusted to it, objects to the  transaction on the basis of Article 14, Part 3 of the RA Law "On  Electronic Communications". "The approval of the transaction may be  rejected in case of non-compliance of the submitted documentation  with the requirements of the PSRC, or if the Regulator considers that  the transaction threatens the national security or state interests of  the Republic of Armenia," the PSRC explained.  In view of the  foregoing, the PSRC decided to reject the application for a deal to  transfer control over MTS Armenia to another company.  The decision  of the Regulator can be challenged in the Commission itself within 30  days from the date of its entry into force or within 2 months in the  Administrative Court. An appeal against a decision does not suspend  its validity or execution.

It should be reminded that on March 30, Garegin Baghramyan, Chairman  of the Public Services Regulatory Commission of the Republic of  Armenia, refusing to name the buyer due to trade secrets, added that  the transaction could be fully completed before April 10. At the same  time, according to him, the acquisition of MTS Armenia by one of the  domestic operators is out of the question, since in this case the  centralization of the market may occur.

To note, MTS Armenia telecommunication company (VivaCell-MTS trade  mark) holds the leadership among Armenian communication operators in  the list of the largest taxpayers. According to the State Revenue  Committee of the Republic of Armenia, in 2022, MTS Armenia paid 15.9  billion drams to the state treasury (10th place against 8th a year  earlier), of which 13.7 million drams - for customs duties, 5.6  billion drams - for direct taxes (including profit tax, income tax),  over 6.9 billion drams - VAT.

VivaCell-MTS entered the Armenian telecommunications market in 2005.  From that moment until now, the company has paid taxes in the amount  of 258 billion drams to the state budget of Armenia. The number of  company's employees is more than 1200 people.  The number of  VivaCell-MTS subscribers, according to the company itself, exceeds 2  million. The company ranks first in the mobile communications market.  Now the main shareholder of the company is the Russian MTS, owned by  Vladimir Yevtushenkov.