ATHENS (Kathimerini)–The state-run Hellenic Telecommunications Organization (OTE) is trying to extricate itself from its investment in Armenia’s telecommunications company and has been in contact with Turkey’s state telecommunications monopoly–Turk Telekom–to sell its 90 percent stake in Armentel–reliable sources say. OTE management is said to be discreetly planning to withdraw from Armentel within 2001–even as this would certainly mean that part of the capital invested would be lost.
OTE bought the stake for $142.5 million three years ago–with the contractual obligation to invest up to $300 million until 2006. The reasons behind OTE’s wish to exit include the rapidly falling Armenian population and equally rapidly rising debts to Armentel–which have reached $20.6 million ($3.6 million by the Armenian government)–causing a suffocating lack of cash flow
A strong indication of OTE’s waning interest in Armentel is that it is planning to drastically cut back its planned $100 million investment program to 2004 by half. The Armenian government–however–is opposed to the cutbacks–citing OTE’s contractual obligation to invest up to $300 million until 2006–the result being an effective lack of a business plan. Nevertheless–OTE does not seem to have sought a differentiation of the contractual investment terms when it signed a memorandum of understanding with the Armenian government last summer.
Through an intermediary–OTE is said to have put forward a plan for the transfer of its 90 percent stake in Armentel to Turk Telecom–in return for a Greek holding in the Turkish company–which is about to be privatized. (The Turkish government announced on Friday it was raising to 51 percent the stake in Turk Telecom being put for sale to foreign investors.) The sources said–however–that the Turkish side does not appear keen on a package deal–preferring to discuss each leg of the proposal separately.
It is not known whether Greece’s Foreign Ministry is aware of OTE’s contacts with the Turkish company and what position is has taken on the issue–seeing as OTE’s investment was regarded at the time as a political and strategic one. The Armenian government is said to be uninformed about OTE’s moves–and its likely reaction is not known. Armentel is the landlocked country’s largest company. The issue has a strong political dimension as Turkey has long sided with neighboring Azerbaijan – where TT also holds a stake – in its conflict with Armenia over the future of the province of Nagorno-Karabakh. TT is also preparing to bid for 70 percent of Telecom Georgia–its other neighbor in the Caucasus.
Irrespective of the outcome of the Greek-Turkish consultations over Armentel–a sale of the company to a European or American firm is regarded as a nonstarter–given the lack of interest. And any change in the status of ownership will–of course–require the agreement of the country’s government–which is not in a position to buy back the utility. Top OTE executives were unavailable for comment throughout last week.