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Major Armenian Internet Provider Acquired by Russian Company for $22.5 Million

Russian telecommunications provider Rostelecom has acquired 75% minus 1 share of Armenian telecommunications operator GNC-Alfa for $22.5 million USD.

According to Rostelecom president Alexander Provotorov, this transaction is the company’s first acquisition outside Russia within the frames of its international development policy.

“Acquiring control of GNC-Alfa will allow Rostelcom to offer digital TV and broadband services with well-developed infrastructure in Armenia’s telecommunications market, which has significant growth potential,” he said, in a company press release.

Note, GNC-Alfa owns a 1.5km-long fiber-optic network passing along the Armenia-Iran gas pipeline and is considered the largest independent player in the local market. In 2011, according to preliminary data, its revenue was $12 million.

The broadband market volume in Armenia in 2011 is estimated at nearly $40 million. GNC-Alfa’s share in the market is about 2%.

Earlier, a source for the Russian newspaper Kommersant had said the possibility of Rostelecom later purchasing Ucom (which provides 11% of the Armenian market of broadband internet access, has 19,500 subscribers and its revenue in 2011 was forecast at $5.3 million) is not ruled out.