Armenia: The Vanishing Profits

The largest telecommunications company in Armenia today is the Armenia Telephone Company (ArmenTel). Since 2007, it has been wholly owned by VimpelCom Ltd., a Russian-Norwegian company valued at about € 342 million (US$ 384 million).

ArmenTel, using the trade name Beeline, now provides mobile and fixed telephone and internet service throughout Armenia.

Since 2007, the company has offered broadband internet services via asymmetric digital subscriber line (ADSL) technology under the brand name HiLine. This provides fast internet service over copper telephone lines. In 2008, ArmenTel also launched the first 3G cell network in Armenia.

In March 2012 it began offering faster service via fiber optic cables, marketed as Hi-Line Optic.

In the first quarter of 2015, the latest data available, ArmenTel had 152,500 internet subscribers. The country has a population of just over 3 million, and about two-thirds of those are internet users.

VimpelCom, operating in 14 countries and headquartered in Amsterdam, is one of the world’s largest telecommunications companies, with customers in Russia, Italy, Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Armenia, Georgia, Kyrgyzstan, Laos, Algeria, Bangladesh, Pakistan, and Zimbabwe.

VimpelCom provides services under the brand names Beeline, Kyivstar, WIND, Infostrada, Mobilink, Banglalink, Telecel, and Djezzy. VimpelCom’s major shareholders are LetterOne Holdings (56.2 percent), and Telenor (33 percent).

LetterOne Holdings was established in 2013 by Alfa Group, which was initially set up to invest in oil, gas and telecommunications, but is legally entitled to expand into virtually all geographical and industry segments.

Three Russian businessmen control most of Alfa Group – Mikhail Fridman, German Khan, and Alexey Kuzmichev. LetterOne, registered in Luxembourg, also owns 13.2 percent of Turkcell, Turkey’s leading mobile phone operator.

The Telenor Group, headquartered in Oslo, is 54 percent owned by the Norwegian government. Telenor operates in 13 markets around the world, including Sweden, Denmark, Serbia, Montenegro, Malaysia, Bangladesh, Pakistan, India, and Thailand.

ArmenTel director vanishes

A money-laundering scandal that engulfed ArmenTel in 2014 is being investigated by Armenia’s National Security Service (NSS). Prime suspect Igor Klimko, ArmenTel’s former director, has decamped for Moscow, from which it is unlikely he will be extradited.

According to Armenian press reports, also missing is most of the money paid to make international phone calls to Armenia via ArmenTel from 2009 to 2012. Such payments averaged US$ 20 million per month.

All or parts of these payments were deposited into various offshore accounts rather than going to ArmenTel. Over the three years in question, some US$ 500 million went missing.

On his Facebook page, Klimko labels such reports as slander, threatening to sue. He alleges that an “information war” is being waged against Russian citizens, painting them as thieves and robbers in the public eye. He says this is being done to divert the attention of people from the real problems in Armenia and to conceal the “dirty deeds” of certain individuals in ArmenTel and other companies.

Klimko doesn’t identify who these individuals might be.

Police have had better luck with other suspects in the same case. Vladimir Sachkov, a Russian citizen and former official at ArmenTel, was arrested in Belarus in May 2014 and extradited to Armenia in March 2015.

Sachkov is charged with cooking the books at ArmenTel and embezzling the funds for international calls. Sachkov came to Armenia in 2009. In 2013, when ArmenTel’s management changed, he left for Belarus and was later appointed as deputy director of technology-related questions at Velcom, a mobile phone operator there.

Armenia’s NSS filed criminal charges against him in 2013 and he was arrested while attempting to flee Belarus for Austria. Sachkov’s lawyer says that his client admits his culpability and is ready to testify.

ArmenTel owner VimpelCom is also caught up in scandal. The company’s name has surfaced in connection with Gulnara Karimova, eldest daughter of Uzbekistan’s president. Karimova is charged with accepting bribes in return for using her influence to obtain telecommunications licenses for companies including VimpelCom, which, along with a parent company, allegedly paid her US$ 176 million. The company is being investigated in Sweden, the Netherlands and the US.

VivaCell-MTS: Russian-Lebanese internet with Armenian connections

While ArmenTel held a monopoly position for years, it began to lose market share in 2005, when K-Telecom entered the Armenian market and began to offer mobile phone and internet services under the brand name VivaCell.

Now VivaCell is the second-largest internet provider in Armenia. By the end of the second quarter of 2015, just over one million people were using the company’s internet services via mobile phones while 73,515 were using its broadband service (including connections via wireless equipment).

VivaCell operates its own network that connects to the Trans-Asia-Europe fiber optic cable system via Georgia and Rostelecom in Armenia.

The company grew out of events in 2002, when the Fattouch Investments Group of Lebanon founded Karabakh Telecom in Artsakh (the disputed territory of Nagorno-Karabakh), then the territory’s only mobile and internet provider. In 2004, Fattouch founded K-Telecom; in 2005 it became a mobile operator under the VivaCell brand.

According to the Lebanese State Registry, the Lebanese company KT (Holding) SAL wholly owns K-Telecom. International Cell Holding Ltd., registered in the British Virgin Islands, is the major shareholder of KT (Holding) with 29,998 shares, while the remaining two shares are controlled by Artem Vasiliev and Pavel Masharov, two management officials at Mobile TeleSystems OJSC (MTS), the largest mobile operator in Russia and the CIS.

In 2007, MTS purchased 80 percent of International Cell Holding Ltd.

The acquisition price was € 310 million (US$ 347 million), including € 50 million (US$ 56 million) to be paid to the seller between 2008 and 2010, provided that K-Telecom reached certain targets in revenues and profitability. MTS also loaned K-Telecom € 140 million (US$ 157 million) to repay existing debt and finance investments.

The parties also signed an option agreement that would allow MTS to acquire the remaining 20 percent of K-Telecom at some future date.

However, VivaCell-MTS General Manager Ralph Yirikian told that the Fattouch Group still owns a 20 percent stake in International Cell Holding Ltd.

According to the Lebanese State Registry, the Fattouch Investments Group is owned by brothers Pierre and Mosa Fattouch (50 percent and 49 percent respectively) with the remaining 1 percent owned by Rashid Hovsep Abu Shakran.

The Fattouch brothers have a third sibling, Lebanese parliament member and former minister Nicolas Fattouch. Their business interests are varied, including projects won via government contracts.

As for Russian MTS, its website says nearly half of the company’s shares are publicly traded, but 51.46 percent are owned by Sistema JSFC, the largest publicly-traded diversified holding company in Russia and the CIS.

Sistema, founded in 1993, is one of Russia’s largest holding companies, with stakes in predominantly Russian businesses in telecommunications, utilities, consumer, high tech, healthcare, pharmacy and others.

Robert Kocharyan, Armenia’s second president, has been a member of the company’s board of directors since 2009. As of July 2014, Kocharyan, in compensation, owns a 0.0052 percent stake in the company.

Vladimir Yevtushenkov, one of the richest men in Russia, owns 64.1 percent of shares in Sistema and serves as the board’s chairman. In September 2014, he was placed under house arrest on charges of embezzlement and legalization of the company’s shares. He was freed from house arrest in November 2014. About 20 percent of Sistema stock is traded on the London Stock Exchange.

ADC Internet – Ex-President’s Son, Minister’s Son and Cadastre Official

Several well-connected Armenian citizens were involved in the Armenian Datacom Company (ADC), a joint Armenian-Norwegian company which was founded in 2006.

Sedrak Kocharyan, son of the second Armenian president, Robert Kocharyan, was involved from the start. So too was Artak Zakharyan, (a former judge and the son of Yervand Zakharyan, Armenia’s Minister of Energy and Natural Resources). Finally, there was Khajak Karayan, deputy to the president of Armenia’s State Real Estate Cadastre.

The company is presently going through a rough period.

In 2007, ADC entered the market providing broadband internet services to corporations. Its website says the company has 1,299 subscribers (690 individuals and 609 legal entities).

In 2010, it purchased the assets, valued at 734,678 million AMD (about US$ 1.5 million today, in 2010 it was about US$ 2 million) of Fibernet Communications Ltd.

Four years later, both ADC and Fibernet were declared bankrupt. In October 2014, VTB-Armenia petitioned the courts to have ADC declared bankrupt in order to recoup a US$ 4 million loan plus penalties. Yerevan’s Arabkir and Kanaker-Zeytun Court of jurisdiction sustained the petition and declared the company insolvent on Nov. 28.

According to Karen Sargsyan, ADC’s director of business development, the verdict was designed to rebuild the company’s financial health and would not affect shareholders or investors.

“Given our charter, these two processes are running concomitantly. In other words, for financial health to be restored, we are obligated to go to the courts and be declared insolvent so that our financial obligations are put on hold for a certain period. Reaching an agreement with the bank, we went that route,” Sargsyan said.

Who are ADC’s shareholders?

Officially, ADC has one shareholder – the Norwegian-registered ADC Holding AS. Sedrak Kocharyan is a board member and Khajak Karayan is the board’s president.

According to a document retrieved via OCCRP’s Investigative Dashboard from the Norwegian Corporate Registry, the main shareholders of ADC Holding AS as of December 2014 are Cupizinco Holdings C. LTD (37.65 percent), Yerevan Telecom CJSC (23.21 percent), and Telesto Norge AS (3.01 percent).

Yerevan Telecom has three shareholders: Sedrak Kocharyan owns 33 percent and Artak Zakharyan owns 30 percent. (Zakharyan resigned in September 2014. While regarded as one of the richest judges in Armenia, he did not declare dividends from Yerevan Telecom since 2007).

Global Soft, a company registered in Armenia, owns the remaining 37 percent.

Global Soft is 95 percent owned by Vahe Khachikyan, with the final five percent held by the law firm Concern Dialog. Khachikyan is also a member of the ADC Holding AS board of directors.

Khajak Karayan, deputy to the president of Armenia’s State Real Estate Cadastre, once owned 47.5 percent of Global Soft shares but unloaded them in 2013. (When Yervand Zakharyan served as the head of the cadastre prior to becoming energy minister, Karayan was his advisor and later became the deputy president. Karayan still serves on the board of ADC Holding AS).

Karayan confirmed to that he was a founding member of ADC but says that he no longer has any connection to the company (it is illegal for certain government officials to engage in business). “I’m engaged in other things. In the first place, I have no right, but I can advise you regarding the sector if you’re interested,” said Karayan.

Karayan said the Norwegian Corporate Registry isn’t up to date and that he should rip up the document confirming that he was president of the board of directors. He says that the board hasn’t been active for a long time. Karayan says that he sold his shares two years ago and has no connection to the company, but remains well-informed regarding the company’s activities. “I looked into it. I know. What do you want with that company? It’s in bad shape now. It wouldn’t be desirable for me to expound,” said Karayan.

As for Vahe Khachikyan, Karayan says he is “ an old school buddy. I’m a good friend of his.”

Cupizinco Holdings C. LTD, which owns 37.65 percent of ADC Holdings AS, is in turn owned by The Amicorp Group, a worldwide network of companies that specializes in management and financial services in the secretive offshore realm. A team of lawyers runs Amicorp and the company’s shareholders are not public knowledge.

Some of the companies it manages have been implicated in money laundering and tax evasion cases. Amicorp Netherlands Holdings B.V. was embroiled in a case involving former Indonesian dictator Suharto. Amicorp managed the business dealings of the Suharto family, earning US$ 15 million in profit.

Telesto Norge, which owns 3 percent of ADC Holdings, was founded by the family of Snorre Osvald Bentsen.

In January 2009, according to, it merged with Delta Partners (registered in Bahrain) which promotes itself as a leading advisory and investment firm specialized in the telecoms, media and digital industry globally. It has offices in the United Arab Emirates, South Africa, Spain, Singapore, Colombia and the United States.

The current legal status of ADC could not be determined, as requests for comment to the company went unanswered.

Ucom – Unknown shareholders: from Gagik Khackatryan to the Virgin Islands

Gagik Khachatryan (Armenia’s current Minister of Finance and former State Revenue Committee Chairman) has said repeatedly that he is not the owner of internet provider Universal Communication (Ucom) in Armenia.

“I do not own Ucom. In addition, it’s a company making a 100 percent profit,” Khachatryan told A1+ TV. He also denies having any stake in the company. “I don’t own any business. Prove otherwise.”

Khachatryan was appointed finance minister in April 2014 after serving as the State Revenue Committee Chairman since 2008. The ministerial appointment required him to file a financial disclosure form.

Khachatryan says he is a modest man who lives solely on his government salary of US$ 21,000 but his financial disclosure showed US$ 2.5 million in the bank. As assets, he also listed five mature saplings, a private house with acreage and commercial structures, and two apartments.

So what links Khachatryan to Ucom?

Ucom, founded in 2007, offers broadband internet, television and fixed telephone service. As of March 24, 2015, it had 67,303 internet subscribers. The company enjoys a 26 percent share of the country’s fixed-line internet market. Overall, it has a 13 percent share of the fixed and mobile internet market in Armenia.

It began in Yerevan before branching out into the provinces.

By 2009, the sole shareholder was Khachatryan’s cousin, Armen Nazaryan. Two years later, shares were split between three people: another cousin, Aram Khachatryan, who held 41 percent; and two brothers, Hayk and Aleksander Yesayan, who each held five percent. (Both brothers held positions at Ucom, Hayk as general director and Aleksander in charge of external affairs).

The remaining 49 percent was owned by IU Telecomunicate Ltd., which in turn was wholly owned by Darison Management Ltd. registered in the British Virgin Islands, an offshore location known for its secrecy. It’s a favorite haven for officials wishing to hide commercial dealings.

Ucom business director Aram Barseghyan told that IU Telecomunicate was owned by “a foreign investor.” He would not reveal the country or the investor’s name. “Naturally, they are individuals. But since I am the business director and have nothing to do with it. I cannot say,” Barseghyan replied.

Hayk Yesayan, Ucom’s general director, did not respond to a query about the identity of the hidden owner.

As Ucom developed, Khachatryan became more prosperous. According to official tax records, 2011 proved to be a break-out year for Ucom when its market position improved greatly. In 2010 it was listed as the 664th largest taxpayer; by 2014, its position had soared to 55th.

Financial records indicate 2011 was also a banner year for Khachatryan. According to his 2009 financial disclosure, Khachatryan had 54 million Armenian drams (US$ 113,000) in revenues. In 2010, his disclosed revenues amounted to 59 million AMD (US$ 124,000).

His revenues shot up in 2011, when he served as president of the State Revenue Commission. While he declared no real estate or other transactions, other investments or securities, he declared overall financial holdings including cash, 278 million AMD (US$ 600,000) and another US$ 3 million. His only declared revenue for the year was 8 million AMD (US$ 16,000) in salary. In 2012, he declared US$ 3.6 million and in 2013, US$ 3.5 million.

From 2011 to 2014, Khachatryan’s wife Laura Yepremyan also declared a total of US$ 3.2 million in cash, although her only known source of income was her salary, which ranged from US$ 1,500 in 2011 to US$3,800 in 2014.

Based on Hetq investigations, Transparency International Armenia, an anti-corruption non-governmental organization (NGO) petitioned the State Ethics Committee for Top Government Officials in 2012. The NGO asked the committee to look into a possible conflict of interest regarding the business interests of the State Revenue Commission president and his duties.

The committee found no such conflict of interest despite evidence proving that Khachatryan’s children were shareholders in MegaMotors and Apeeron. It also found that his cousins were shareholders in the companies Megafood, Ucom and Chronograph.

Ucom Eats an Orange

In July of 2015, Ucom bought out Orange Armenia, whose chief executive officer, Francis Gilbert, was asked why Orange decided to sell and leave the country. Gilbert said Orange could not offer the increasingly popular consumer option of packaging four services for one price: cellular connection, landline connection, landline internet and cable television.

He said the sale will allow Ucom to corner 20 percent of market share while providing such a package. Orange’s market share was so small that it had lost about € 185 million (US$ 207 million) in recent years and did not see realistic opportunities for growth, he said.

Orange had provided wireless broadband internet via H+ radio links. According to the company’s 2014 year-end report, it had 130,725 broadband internet subscribers (not counting users via telephone).

GNC Alfa – Who is behind Rostelecom?

Under the brand name Rostelecom, GNC Alfa CJSC provides fixed-line telephone, internet, and new-generation IP TV (streaming video) services to private and corporate customers in Armenia. As of Dec. 31, 2014, Rostelecom (Armenia) had 27,554 internet subscribers.

Rostelecom’s network in Armenia is based on fiber-optic cable (FOC) infrastructure covering 80 percent of the country. It is connected to the region’s main terrestrial networks and largest traffic exchange nodes, as well as international channels from Iran and Georgia.


GNC Alfa was founded in 2007. The founder and sole shareholder was Armen Melik-Santurdichyan. The company quickly reorganized and became a closed stock company. The shareholders also changed.

The private company entered the market in 2012 when Rostelecom purchased 75 percent of GNC Alfa’s stock for US$ 22.5 million, according to a company statement. The purchase expanded Rostelecom operations outside Russia for the first time and enlarged its network, connecting the Persian Gulf overland with Europe.

Hayk Faramazyan, GNC Alfa’s executive director, told the company’s sole shareholder was Rostelecom.

But in fact, the company’s stock now belongs to Filor Ventures, a company registered in Cyprus. Filor Ventures has two shareholders: Bovlon Investments Ltd. (25 percent); and Rostelecom International Ltd. (75 percent).

Rostelecom International Ltd. is a 100 percent subsidiary of the Russian Rostelecom OJSC, whose largest shareholders are various Russian government agencies: the Federal Agency for State Property Management (Rosimushchestvo), 43 percent; the National Settlement Depository, 42 percent; Vnesheconombank, 3.8 percent;, and the Russian Direct Investment Fund controlled by Vnesheconombank, 1 percent; Rostelecom, 6.8 percent, and Mobitel, 12 percent. (These figures are posted on the company website; it is unclear why they add up to 108.6 percent).

Based on that information, contacted Faramazyan again, asking who owns the remaining 25 percent of GNC Alfa Bovlon Investments Limited. Faramazyan said again, “One hundred percent of the shares are owned by Filor Ventures Ltd. Rostelecom OJSC controls (the shares).”

Local Providers

The other relatively large internet providers are local limited liability companies: Interactive TV, Aranya, Arpinet, Maylan and Web.

In 2012, Ucom bought Interactive TV.

Aranya joined Rostelecom’s fiber optic cable network and offers broadband internet to the entire Ararat Province of Armenia. It has three shareholders –Andranik and Stepan Minasyan, who are brothers; and Arman Gabrielyan.

Arpinet services Armenia’s Armavir Province, providing internet and IP television to private and corporate customers. The sole shareholder is Grigor Babakhanyan.

Mylan Ltd. is registered in Vanadzor and provides internet to Lori Province. Armen Merdjanyan is the shareholder.

Web has three shareholders: Albert Doneyan, Kolya Hovhannisyan, and Ruben Mkrtchyan. It was founded in 1996 and now has 1,265 subscribers.

Edik Baghdasaryan and Kristine Aghalaryan

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