Uzbek authorities offer to purchase assets of bankrupt MTS subsidiary

15 Aug 2013

Russian mobile giant Mobile TeleSystems (MTS) has announced that, following two failed attempts to sell the assets of its bankrupt subsidiary MTS Uzbekistan, Uzbek authorities have offered to purchase the assets from the company’s creditors. In the wake of the forced closure of MTS Uzbekistan in mid-2012, the cellco declared itself bankrupt in January 2013 and in April that year the company’s creditors launched a tender to dispose of the assets of the stricken provider. According to a statement from MTS: ‘The liquidation administrator has now proposed that the creditors of Uzdunrobita [the previous name for the MTS subsidiary] purchase these assets. Should this proposal not succeed, the liquidation administrator may transfer all of the assets of Uzdunrobita to local authorities.’

As noted by TeleGeography’s GlobalComms Database, MTS Uzbekistan was closed down by Uzbek authorities in mid-2012, on the basis that the company and its management had committed a litany of crimes and infractions. MTS denies any allegations of wrongdoing, accusing local officials of perpetrating a ‘shake-down’: the case against MTS followed a pattern similar to other raids on foreign-owned firms in Uzbekistan such as Newmont Mining, Oxus Gold, Zeromax and Spentex, amongst others, whereby the company would come under investigation, only to be forcibly shut down and either seized or bought out at well below value, for the benefit of Uzbekistan’s notoriously corrupt ruling elite. Gulnora Karimova, the daughter of Uzbek President Islam Karimov, described as a ‘robber baron’ by US diplomats, is widely believed to be behind the raid on MTS. Karimova is believed to have seized Uzdunrobita in the past, prior to its sale to MTS in 2004. MTS remains adamant that Uzbek authorities have sought to illegally appropriate the company, and has filed a claim against the Republic of Uzbekistan in the International Centre for Settlement of Investment Disputes (ICSID).