By accepting 20% stake in MTS Armenia as gift, government sends  message to other companies:  Pashinyan

ArmInfo.The Government of Armenia accepted a 20% stake in the MTS Armenia company as a gift and  transferred the authority to manage it to the office of the Prime Minister of the Republic of Armenia. The decision was approved on February 29 at a meeting of the Cabinet.

As Pashinyan's chief of staff, Arayik Harutyunyan, stated when  presenting the draft decision, the Fedilco Group Limited company is  the 100 percent owner of 550,000 shares of MTS Armenia CJSC with a  nominal value of 1,000 drams. "At the general meeting of the company  on February 16, 2024, it was decided to transfer 110,000 shares to  the Republic of Armenia, which is equivalent to 20% of the 100%  shares of "MTS Armenia" CJSC," he said.

In turn, the Armenian authorities, taking into account the strategic  importance of MTS Armenia CJSC for the telecommunications sector of  the Republic of Armenia, the strategic goals of the government in  this area, as well as the current state of the IT sector, decided to  accept these shares as a gift.  "The Government of the Republic of  Armenia accepts the gift with gratitude and is pleased to note that  the people of Armenia, represented by the Cabinet of Ministers, have  the opportunity to ensure their presence and participation in a  company of strategic importance for the republic," Prime Minister  Nikol Pashinyan said.

At the same time, according to him, this is not the only possible  format for public participation in business management. The prime  minister offers companies to list their shares on the stock exchange.   "By accepting this gift, the government wants to convey a message to  other companies - not that they need to donate their shares to the  government, but that they should pursue a policy of transformation  into an open joint stock company, which will mean 100% transparency  in their work," he said. As the Prime Minister indicated, the  government will most likely introduce a differentiated tax approach  in relation to OJSC and CJSC.

According to him, there has been and will be a lot of speculation on  the topic of transferring shares of a number of companies to the RA  government. "I don't think there are countries that allow a foreign  investor to acquire 100% of the shares of a telecommunications  company, and at the same time the government remains a passive  observer and has no idea what is happening there. In any civilized  country such an approach is excluded," Pashinyan noted.

In turn, Armenian Finance Minister Vahe Hovhannisyan noted that the  government is working on a concept for state participation in private  companies. The document will identify sectors of strategic  importance, where state participation in the management of companies  will be considered a priority.  Earlier, on January 24, MTS announced  the closing of a deal to sell 100% of the shares of MTS Armenia CJSC,  its subsidiary in the Republic of Armenia,  (Viva-MTS brand, serves  2.3 million subscribers) to the Cypriot Fedilco Group Limited. The  transaction also included MobiDram CJSC, a payment system providing  financial services in the Armenian market, a 100% subsidiary of MTS  Armenia.

Before the deal, MTS Armenia owned by Aramayo Investments Limited,  which, in turn, through the Luxembourg Allegretto Holding was 100%  owned by MTS. According to media reports, the beneficiaries of  Fedilco Group Limited are Zhe Jang and Konstantin Sokolov. The  Armenian Regulator approved the sale of 100% of the shares of MTS  Armenia to the Cypriot Fedilco Group Limited from Aramayo Investments  Limited in November 2023. A similar application by Fedilco was  rejected by the Commission in April 2023 because it "threatened the  national security or state interests of the Republic of Armenia."