MTS sells stake in Uzbek JV UMS

Andrei Smelkov, MTS' Foreign Subsidiaries VP

MTS prepared to take around a RUB3 billion (€41.6 million/$46.2 million) hit in write downs after selling its stake in Uzbekistan operator Universal Mobile Systems (UMS).

The Moscow-headquartered group on Friday revealed that it agreed to sell its 50.01 per cent stake in UMS to the Uzbek government; specifically the State Unitary Enterprise Centre of Radio Communication, Radio Broadcasting and Television of the Ministry of Development of Information Technologies and Communications.

MTS predicted the decision would result in a write down of around RUB3 billion, which it plans to book in its third quarter earnings.

“Due to a variety of business reasons and other circumstances, MTS decided to sell its stake in the joint venture UMS LLC,” vice president and director of MTS’ foreign subsidiaries business unit Andrei Smelkov explained.

MTS was granted a stake in the UMS joint venture at no cost in mid-2014, and the operator began service in Uzbekistan later that year.

The company separately told Reuters that its decision to sell its stake in the Uzbek joint venture is not related to investigations of MTS’ business in Uzbekistan by the U.S. Department of Justice (DoJ), Securities and Exchange Commission (SEC), or the European Commission (EC).

MTS’ relationship with Gulnara Karimova, the eldest daughter of Uzbek president Islam Karimov, is at the centre of those investigations, Radio Free Europe Radio Liberty reported. It is suspected that MTS and other international operators paid bribes through Karimova to gain operating licences in the country.

Netherlands-headquartered VimpelCom is to date the biggest victim in probes of the alleged corruption in Uzbekistan. The operator in February agreed to pay $795 million (€716 million) in fines and disgorgements to the DoJ, SEC, and Dutch prosecutors to end their investigations of its dealings in the country.

Current VimpelCom shareholder Telenor is another high-profile name associated with the Uzbek corruption probes. An independent investigation by law firm Deloitte Advokatfirma cleared the company’s management of acting corruptly, but criticised the way Telenor handled its stake in VimpelCom.

For more:
- see this MTS statement
- view this Reuters article
- see this Radio Free Europe Radio Liberty report

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