Armenia does not hang up – Newspaper Kommersant No. 62 (7507) of 04/11/2023
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MTS failed to approve the sale of MTS Armenia operating under the Viva-MTS brand from the Armenian regulator. The buyer was supposed to be the Cypriot Fedilco Group Limited, whose ultimate beneficiaries were not disclosed. Experts admit that in the course of studying the deal, the Armenian authorities identified the risks associated with the new investor. As options, they name the probability of the buyer’s affiliation with MTS itself or other Russian structures.
The Public Services Regulatory Commission of Armenia (PSRC) has not approved the sale of 100% shares of MTS Armenia (works under the Viva-MTS brand). This follows from the PSRC message posted on April 10 on the regulator’s website. The application was submitted by the operator on January 26. According to Times.am, the deal was supposed to be closed by April 10.
MTS Armenia, which is 100% owned by the Cypriot Aramayo Investments Limited (which, in turn, is 100% owned by MTS PJSC through the Luxembourg Allegretto Holding), planned to buy another Cypriot structure – Fedilco Group Limited (established in April 2022 , the ultimate beneficiaries are not displayed in public registers), the Armenian regulator said in a statement. Based on the fact that Allegretto Holding belongs to a Russian legal entity, MTS Armenia was supposed to withdraw from the operator’s structures following the transaction.
As reported “Interfax” in the press service of the PSRC, the regulator made a negative decision, following the legislation of Armenia, according to which it can refuse a transaction if “it does not meet the requirements, threatens or may threaten the national security or state interests of the country.” PSRC clarified that MTS has 30 days to appeal. MTS declined to comment on the situation.
According to the official version, MTS was going to sell the asset in order to “focus on business development in Russia.”
The company also considered the sale of shares if “there are buyers with a good assessment.” Armenian media reported that Gazprom or the 1Xbet bookmaker could become potential investors, experts estimated the Armenian legal entity at 19 billion rubles. Kommersant’s interlocutors assumed that the decision to sell the asset was also influenced by the introduction of sanctions against MTS Bank in February (see. “Kommersant” from March 13).
The revenue of MTS in Armenia for 2022 increased by 4.1%, to 51 billion drams (10.7 billion rubles at the exchange rate of the Central Bank on April 10), with the group’s total income of 541.7 billion rubles. MTS Armenia serves 2.3 million subscribers. After the outbreak of hostilities in Ukraine, 108-110 thousand Russians moved to Armenia, and last year about 2.5 thousand legal entities with Russian participants were opened in the country, not counting 4 thousand businesses registered in the form of individual entrepreneurs (see. “Kommersant” dated March 16).
In addition to the asset in Armenia, MTS still has one more subsidiary telecom operator in the CIS – MTS Belarus (49%), its revenue for 2022 amounted to 43 billion rubles. In 2019, MTS sold its subsidiary VF Ukraine, and in 2016, its Uzbek operator Universal Mobile Systems (UMS).
The fact that the buyer of the asset was to be a Cypriot offshore company with unknown beneficiaries may indirectly indicate the desire of MTS to maintain veiled control over the business in Armenia, says Nikita Tsaplin, founder and CEO of the RuVDS hosting provider.
“If this still fails under the sanctions, the most likely candidate may be Team Telecom Armenia, which previously bought Beeline’s subsidiary in this region and ranks second after MTS Armenia in terms of the number of subscribers,” Mr. Tsaplin believes.
During the examination, which is being carried out by the regulator to make a decision, Fedilco Group Limited “most likely disclosed the beneficiaries,” the source of Kommersant in the telecommunications market believes. In his opinion, based on the arguments of the PSRC, “it can be concluded that the owners are connected with Russian business and are under the threat of sanctions, which would create additional risks for the Armenian side.”
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