MTS discusses start of subsidiary’s bankruptcy proceedings in Uzbekistan

Uzbekistan Materials 15 January 2013 16:51 (UTC +04:00)

Uzbekistan, Tashkent, Jan. 15 / Trend D. Azizov /

Russian Mobile TeleSystems (MTS) has begun to discuss bankruptcy proceedings for its subsidiary in Uzbekistan, Uzdunrobita Ltd. This action has been discussed as a possible way to be able to suspend the payment of penalties, a source in Uzdunrobite told Trend on Monday.

As reported, in June 2012, regulatory authorities in Uzbekistan started an examination of Uzdunrobita's activity, which is the largest mobile operator in the country.

The Prosecutor General's Office authorized the seizure of original documents and an inventory of the company. It also conducted arrests and mass questionings of its employees. Subject to the requirements of the State Communications Inspectorate, Uzdunrobita shut down its Uzbek mobile network in July which resulted in more than nine million customers being left without mobile phone service.

In August, the Economic Court of Tashkent supported a statement of the Uzbek Agency for Communication and Information (UzACI) calling for the revocation of all Uzdunrobita licenses, accusing the company of operating its affiliates without the proper licensure.

In September, Tashgorsud Criminal Court sentenced four managers of Uzdunrobita accused of stealing funds from the company through the purchase of equipment at inflated prices, and "organization of a criminal group to extract uncontrolled profits" to hard labor terms of various lengths as well as other sanctions. Also, the court decided to transfer all assets of Uzdunrobita to the state.

In November, the Tashgorsud Board of Appeals partially upheld Uzdunrobita' complaint and reversed the lower court's decision on the transfer of its assets to the state.

The board has determined the amount of financial claims in Uzdunrobita to be at $ 600 million with the ability to pay this amount in installments over a period of eight months.

In addition, the panel recognized Uzdunrobita as the civil defendant in a criminal case against four of its employees and withdrew the freeze on the company's assets that was imposed by a court of first instance. The sentence of first instance to managers was upheld.

The total amount of claims against the company by the Prosecutor General's Office, regulatory authorities, The Agency for Communication and Information and tax authorities amounts to over one billion dollars, which is the amount of investment made by MTS in the development of business in Uzbekistan.

According to the source, the current situation around Uzdunrobita is rapidly developing. On Monday, many employees of Uzdunrobita received notices of dismissal. The company has retained some technical staff to keep equipment running.