YEREVAN, April 15. /АРКА/. For several days now, the Armenian information field has been fermented by the scandalous situation over the telecommunications operator Ucom. Until recently, nothing boded a high-profile showdown, and the company itself was preparing for the deal of the year - the purchase of Beeline in Armenia. But in fact, everything turned out to be much more complicated.

Ucom History

Before, however, a little from the story about the company itself, which began many years ago, when young and ambitious businessmen - brothers Hayk and Alexander Yesayan decided to start their own business.

In 1999, the Yesayans founded a telecommunications startup to provide IP-telephony services, which grew into a small company Ucom.

Starting from the internet market, the company further expanded and gradually encompassed new segments - first the telephone services market, then the mobile telephony market, and then gradually expanding and transforming, it turned into one of the largest telecommunication operators in Armenia. It is clear that this would not have happened on the enthusiasm of young specialists alone. Serious investments were needed, which the brothers raised through the sale of approximately 94% of the shares to Gagik Khachatryan, the former head of the State Revenue Committee and the and the former finance minister, and his sons (about 78%) as well as to Samvel Karapetyan, a large Russian businessman of Armenian descent, who runs Tashir Group (about 16%).

As a result of the deal, the share of brothers in the company they founded was about 6%. Investors tried not to interfere in the brothers’ policy of development of the company, leaving control to them. More than that - about five years ago, Ucom made the largest transaction in the telecommunications market of Armenia by purchasing a 100% stake in Orange Armenia, the Armenian subsidiary of France Telecom, a French operator.

Beeline Purchase

The apparent disagreement between the shareholders began after Ucom announced its intention to acquire Beeline in Armenia and began preparations for the deal. While the application was going through necessary procedures at local regulators, rumors emerged that after the formalization of the deal the Yesayans can be ousted from management.

Rumors were going around about shareholders’ intention to invite the CEO of Beeline in Armenia Andrey Pyatakhin to the post of the general director of the consolidated Ucom / Beeline. The latter is distinguished by high professionalism and good communication abilities. He also has sufficient experience in the field. The candidacy is acceptable, but it absolutely does not suit the Yesayans and some of the employees, because, in their opinion, Pyatakhin will surely bring his team of specialists to the merged company.

Rumors were going around that Pyatakhin received an offer to take the post of CEO in exchange for providing some commercial information. However, Pyatakhin himself and his press service denied these allegations, saying that no information, except that which was necessary for the regulator to decide on the transaction, has been provided. Moreover, Pyatakhin remains at his position in Beeline and is not going to leave it. This whole situation led to the fact that Hayk Yesayan resigned from the post of general director of Ucom, and with him, according to some reports, more than 800 people resigned (in total, the company has 1800 employees).

Offer of the Yesayans

While passions were raging, Hayk Yesayan gave an explanation. He said that long before the scandalous resignation, the brothers offered to buy the shares of other shareholders (94.06% of the shares). According to him, other shareholder even agreed to cede their part of the package for 22.1 billion drams (about 45 million dollars). However, when the Yesayans said they were ready to pay this amount, the shareholders changed their minds and refused the transaction.

Yesayan said that he intended to transform the company into an OJSC by providing 20% ​​of the shares to employees on preferential terms. However, he could not convey his vision and development strategy to the main shareholders and wrote a letter of resignation.

Tthe brothers do not intend to sell their share. Moreover, they raised rates and declared their readiness to pay the highest possible price, taking into account the investments made in these companies over the years. The new offer is 34,057,000,000 drams (about $ 70 million) for 94.06% of the shares.

Shareholders do not Want to Burn Bridges

So far, no official response has been received from the main shareholders. But some sources note that the Khachatryan family does not mind selling their share to the Yesayan brothers. Sources believe that there may be a snag in the price and Samvel Karapetyan, who has not yet commented on the situation. At the same time, in the official statement of the Galaxy Group, which in fact is the largest owner of Ucom shares (owned by the family of G. Khachatryan), it is noted on behalf of the company's board of directors that the situation in Ucom is stable.

Moreover, they noted that the silence of the supreme body of the company in such a situation caused concern, but fits into the framework of legal and ethical standards. The Galaxy Group noted that they did not try to “burn bridges or leak information” so as not to manipulate public opinion or the threat of dismissals during the negotiations, but they were completely in control of the situation and initiated the process of settling the matter.

The owners of the Galaxy Group also expressed hope for continued cooperation with Hayk Yesayan, whose experience will be useful to the board of the company. They also said that they appreciate all employees and reminded that, being the owners of the company, they made large-scale investments and did not receive any dividends for 12 years.

The current Ucom managers were quick in refuting the words of the Galaxy Group noting that the statement has nothing in common with the reality, that the Galaxy Group does not own the situation and that such a body (board of directors) does not exist at all in the company’s structure.

Updated Ucom

According to the estimates of a number of experts in the field, who were interviewed by the correspondent of the ARKA-Telecom portal, given the activity of the Yesayan brothers and their ability to build a business from scratch, as well as a powerful team that is ready to follow them, it will not be difficult for them to create a new company. Especially if we take into account the assertion of Yesayan himself that he is guided by the right strategy and vision of the future.

Analysts say it will not be difficult for the brothers to obtain the necessary license and start their own business, especially since they have enough skills in this. The brothers themselves say that they see in the future a super-powerful company that will transform from telecommunication services to a wider range of services - in addition to the Internet and mobile solutions to television, cloud services, etc.

Blackmail or Raider Seizure

Many experts, whom the telecommunications portal ARKA-Telecom asked for comment, agreed to speak on this matter only on condition of anonymity, so that, according to them, they would not spoil relations with any of the sides of the conflict.

As a result, a number of analysts consider the actions of the brothers nothing more than blackmail, an attempt to push their own position under the threat of mass layoffs of personnel and, as a result, the failure of the company.

"The Yesayan brothers are trying to dictate terms, owning an insignificant share, appeal to the mass resignations in the company, blackmailing the remaining shareholders, hinting at the possibility of paralyzing the company’s work," one of the industry experts said, noting that they are unlikely to succeed.

However, Karen Vardanyan, Executive Director of UATE (Union of Advanced Technology Companies, currently chaired by Alexander Yesayan), believes that the situation around the company resembles a raider seizure.

“Our oligarchs made an attempt to seize Ucom, so they negotiated with the current Beeline director to run Ucom as much as possible, trying to “shaft” the Yesayan brothers. This is a very important precedent, since the seizure was carried out in relation to a company that is a critically important infrastructure for the country “An attempt is being made to oust the only national operator from the Armenian market,” Vardanyan said.

In his opinion, the situation should be resolved as soon as possible. As one of the options, Vardanyan proposes to nationalize a 94% stake in the shareholders and ensure the stable operation of the biggest internet and telecom operator.

Meanwhile, a source in the ministry of high technologies of Armenia told ARKA-Telecom that the authorities would not support such an idea, since the company is private and the government cannot intervene in such matters. Otherwise, it will already look like an attempt to put pressure on investors. Nevertheless, according to the official position of the ministry, this situation should be resolved quickly taking into account the strategic importance of the area.

Two Sides of the Coin

Vigen Hakobyan, a political analyst, said the situation has many nuances - there are founders who established the company and designed the entire policy of its development and expansion. People who from the first minute to this day independently “screwed all the bolts and nuts”, whose management allowed bringing the company to a high competitive level.

“There are ideological inspirers and managers who have succeeded, but at the same time, there are partners who have made financial investments. We all understand that if so many people leave the company at the same time, it can be doomed to failure and it will be impossible to recover. In the current circumstances, this will mean big losses, especially now, when much is tied to communications, including the IT sector and e-government,” Hakobyan noted.

In his opinion, the government should also be interested in ensuring that the company comes out of the situation as strong and stable as possible. The expert expressed the hope that the matter will not come to the fragmentation of the company.

A Blow at National Operator or Stress Test?

A special degree of the situation, from the point of view of the supporters of the Yesayan brothers, is given by the speculation that Armenia may lose its only national operator (there are two more telecom operators in the republic - Viva-MTS (the subsidiary of the Russian MTS) and Beeline in Armenia (the subsidiary of the VEON Group). In particular, many fears are related to the circumstance that one of the Ucom shareholders, Samvel Karapetyan, who owns 16% of the company’s shares, is a Russian citizen, and his stake in the company can increase significantly upon the Beeline purchase, therefore Ucom de jure will become a company with Russian capital. However, it should be noted that statements about the threat of losing the national operator are not entirely true. Firstly, Ucom is not a state-owned company - its owners are private shareholders. Secondly, they are all Armenians: Yesayan brothers, the Khachatryans and the Russian businessman of Armenian descent, Samvel Karapetyan, who, living in Russia, is actively investing in the development of various Armenian infrastructures. Therefore, such loud statements are, to put it mildly, groundless.

At the same time, Vigen Hakobyan thinks the situation with Ucom, just as things in the domestic aviation sector, has shown the importance of having a national operator in backbone areas.

“Often, even in such areas, the state can have its influence - in the form of shares, property or other things. Experience shows that in extreme situations, the economy and even the humanitarian sphere do not have immunity. That is why it is necessary to have a national operator that will ensure independence from geopolitical influences. It was a very important stress test for the country,” Hakobyan said.

Shareholders must Resolve Dispute Peacefully

The situation when shareholders cannot come to a common decision is not new for the market. Often, larger shareholders and investors try to supplant the company main founders who have a minimal share in it, but have been managing it for many years.

In this situation, the issue of company profitability is also important. Such decisions may be made, inter alia, due to company losses due to mismanagement or irrational use of investments. This is not the case with Ucom, which has always submitted positive financial statements and even issued its own bonds.

At the same time, it happens that large investors want to make not entirely rational investments, to which managers are strongly opposed and which can lead to conflict. In any case, the situation in the company must be resolved peacefully and between the shareholders themselves.

This opinion, in particular, is shared by the founder of Menu Group, Vahan Kerobyan, who believes that shareholders should come to a common denominator, and therefore either the main shareholder will sell their shares to other owners, or those to him, but at market price.

In any case, as the entrepreneur notes, the authorities should take into account the situation, since it can also hit the country's rating in the Doing Business report, where Armenia stands at one of the last places in terms of protecting the rights of minority shareholders.

Will there be Sale?

Against the backdrop of the scandal, the situation with the deal between Ucom and Beeline is still in limbo, especially since the Armenian regulator - the State Commission for the Protection of Economic Competition - suspended the application due to the state of emergency declared in the country because of COVID 19. Neither the regulators, nor the ministry of high technology industry have so far given permission for the deal, and it is in question.

So far, the ministry has called on the company and shareholders to display responsibility and be guided by their obligations specified in the law on the state of emergency and in decisions of the Commandant’s Office, attaching importance to the smooth operation of communication and telecommunication services.

About Companies

The Armenian company Ucom (Universal Communications) was founded in 2007. Ucom, being one of the flagship companies in the telecommunications market of Armenia, provides a full range of services in this field: high-speed symmetric internet, IP-television and digital telephony.

"VEON Armenia" CJSC (Beeline brand) provides fixed and mobile communication services. Since April 2007, a 100% stake in VEON Armenia CJSC (formerly ArmenTel CJSC) has been owned by Veon Group, which is one of the world's largest integrated telecom operators. -0-