major sectors of the economy : jewelry and diamond processing : manufacturing : information technology : natural resources : chemicals and pharmaceuticals : agriculture : food processing : tourism : construction and construction materials : energy : transport : telecommunications : water

Telecommunications

Armenia has about 576,800 telephones; average telephone density is 17.7 per 100 persons. International connections to other FSU republics are by landline or microwave, and to other countries by satellite and by leased connection via the Moscow international gateway switch. Private TV broadcasting stations, cable networks and Internet providers are increasing in number.
Reform in the telecommunications sector was an early priority for the Armenian authorities, and state telecommunications company ArmenTel was offered for privatization in the early stages of transition. With 50 per cent foreign ownership, the company went through a restructuring phase, followed soon after by the sale of a 90 per cent share to a strategic investor, OTE of Greece. The government retains 10 per cent.
ArmenTel has charter capital of US$ 158 million. OTE paid US$ 142 million for its share in ArmenTel in 1997. OTE is committed to US$ 100 million in investment. However, under its sale agreement with the government, ArmenTel has been granted a monopoly in international telecommunications services for 15 years, with the result that no other company is able to provide international satellite services. This is proving a major issue to overcome for Armenia's WTO membership, and is critical to an EBRD post privatization equity and debt investment, which would benefit ArmenTel's corporate governance and financial strength. Sector deregulation is under way through an ongoing EBRD technical assistance program due to be concluded within 2000. ArmenTel is the main provider of Armenia's long distance, cellular and paging services, and has engaged in an ambitious project to modernize the country's entire telecom network. This involves installing fiber optic cable, digital telephone switches and cellular and paging services. Siemens (Germany) is providing over US$ 100 million in credits for procurement of equipment. Early this year work began on the installation of the 240-kilometer fiber-optic trunk line linking the north and west regions of the country. This cable will provide 150,000 digital lines of which 102,000 will be in Yerevan and 48,000 in regional centers. The total cost of the project is estimated at US$ 56 million, of which US$ 33 million will pay for switchboards (from Siemens and Greece's Intracom) and US$ 10 million will pay for cable and auxiliary equipment.
The main Internet providers are Arminco and Infocom (both use ArmenTel's satellite channels for connecting to the Internet), and ACC. There are a growing number of Internet users, both residential and in business. However, the service is inconsistent and there is potential for competitors to enter the market.

International Connections

In November 1999, a 230-kilometer fiber-optic trunk line was opened between Armenia and Georgia. An agreement has been signed for a 140-kilometer fibre-optic line between Megri and the Iranian town of Marand, near the border. This line will be laid by Hellascom (Greece) with investment from ArmenTel. The EC is financing the implementation of the Caucasian Railways telecommunication network, covering installation of underground optical cable in all three Caucasian states, to allow for a direct connection with Europe (as part of the Trans Asia-Europe cable running from Frankfurt to Shanghai). Part of the capacity of the optical cable will be used by Armenian Railways to improve the management of its operations and to increase traffic. The remaining capacity will be made available to private operators, improving the Armenian telecom market.
ArmenTel is also negotiating with Georgia on plans to lay a fibre-optic line to Russia and Ukraine through its territory. ArmenTel has expressed readiness to invest in the line between Poti (Georgia) and Novorossisk (Russia), which would give ArmenTel considerable income from traffic.