World Markets Research Centre
Global Insight
May 22, 2009

Armentel and Vivacell Relish Challenge of Third Mobile Operator in Armenia

by Michael Lacquiere


Armenia's existing duopoly of mobile operators, Vivacell and Armentel,
have indicated that they are well-prepared for the entrance into the
market of a third operator, France Telecom's Orange, which is due to
launch services before the end of 2009. Vivacell has acknowledged that
it took into consideration the arrival of a new operator, when
planning its activity for 2009, according to various press reports
citing company General Director Ralph Yirikian. However, the group
declined to comment on whether it would revise its tariffs in direct
response to Orange's arrival. Yirikian also lauded the likely social
effect of the launch of a new operator, pointing out that it would
create hundreds of jobs in Armenia. Meanwhile, Dmitry Pleskonos,
executive vice-president of Armentel owner VimpelCom, has dismissed
suggestions that his group may struggle in the new competitive
atmosphere, pointing to the fact that VimpelCom has experience of
competing with leading European companies in various other
markets. VimpelCom's markets of operation include Uzbekistan,
Kazakhstan, Ukraine, and Russia, where its rivals include TeliaSonera,
Turkcell, and Telenor.

Significance:With penetration in Armenia now rising above 70%, the
existing pair of operators is already well established, and Orange
will do well to grab a sizeable market share. Nevertheless, with the
backing of an experienced and financially strong foreigner owner in
France Telecom, Vivacell and Armentel can expect to be challenged by
competitive tariffs and the threat of increased churn.