Russia’s MTS Uzbek unit files for bankruptcy

MOSCOW - Agence France-Presse

Russia’s top mobile operator MTS said yesterday that its Uzbek subsidiary had filed a bankruptcy petition, a move highlighting the potential problems for foreign investors in the Central Asian state.

Uzbek authorities in August ordered the seizure of all property of the Uzdunrobita subsidiary of MTS and stripped the firm of its operating licence.

The subsidiary was hit with a huge tax claim and its managers accused of money laundering -- charges which MTS called an ill-disguised attempt by the Uzbek authorities to win control of the profitable business.

“A petition to declare bankruptcy was filed due to Uzdunrobita’s inability to fulfill obligations pursuant to the ... criminal case against Uzdunrobita’s employees and to the decision ... which determined the total amount of fines and penalties to be paid by Uzdunrobita to be at approximately $600 million,” MTS said in a statement.

Uzdunrobita was established in 1991 and became a part of Mobile Telesystems (MTS) in 2004. It had 9.5 million subscribers by the end of 2011.

Uzbekistan, Central Asia’s most populous republic with a population of 29 million, has been ruled since the Soviet era by President Islam Karimov and retains strong state influence over politics and economics.