Bulgaria's ISP Sector 'Generally Clean'

Business | February 4, 2016, Thursday // 10:08
Bulgaria: Bulgaria's ISP Sector 'Generally Clean' File photo

Although Bulgaria's internet service providers are generally not infiltrated by "organized crime or corrupt politicians", fears are growing that a Russian businessman might get a hold of the biggest Bulgarian telecom, a recent analysis argues.

The Internet Ownership project, jointly carried out by the Organized Crime and Corruption Reporting Project, EurActiv and RISE project, writes in a recent publication that a Russian businessmen "with close ties to the Kremlin is seeking to control Vivacom, the biggest and most strategic Bulgarian telecom".

After a decade of consolidation, Vivacom, Blizoo, Bulsatcom and Mtel controlled 52% of the internet service market with a total of 900,000 subscriptions as of the end of 2014, and big companies started to build their own intercity networks, also topping the list of biggest carrier and transmission operators.

On the extent of infiltration by organized crime into the ISP business, the analysis reads: "Gone are the days when Russian tycoon Michael Cherney was the owner of the single GSM operator in Bulgaria. The hi-tech complexity of the IT-business is probably one reason the mobsters avoided it. They preferred investments in real estate, construction and tourist services, a much more familiar and less accountable sector, where fast money can be made and dirty money laundered. The long-term result is that the IT in Bulgaria and in particular the ISP business is an almost clean sector. Even the offshore ownership in some companies seems to be a choice of tax optimization, instead of hiding the real owner."

However, among issues of concern should be noted "the opaque ownership of the historically biggest operator Vivacom", which was formerly owned by collapsed Corporate Commercial Bank (KTB)'s majority shareholder Tsvetan Vasilev and VTB Capital, the analysis also notes:

"The disputes related to Vivacom’s ownership are ongoing and the company is in danger falling under the full control of the pro-Putin oligarch Konstantin Malofeev or the Russian VTB Bank."

In November, Bulgarian businessman Spas Rusev was declared winner in a marathon bidding to acquire Vivacom for EUR 330 M.

Several other cases have also been singled out, with businesses of former advisеr at the counter-intelligence and security agency DANS Alexei Petrov and Overgas CEO Sasho Donchev.

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Tags: ISP, Internet, Internet Reporting Project, Konstantin Malofeev, Spas Rusev, Vivacom, Tsvetan Vasilev, Sasho Donchev, Alexei Petrov, Michael Cherney

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