MTS exits Uzbekistan; offloads UMS stake to government JV partner

8 Aug 2016

Russian telecoms group Mobile TeleSystems (MTS) has sold its 50.01% stake in Uzbek mobile provider Universal Mobile Systems (UMS) to the Uzbek government for an undisclosed sum. The operator announced that it had offloaded the shares to the State Unitary Enterprise Centre of Radio Communication, Radio Broadcasting and Television of the Ministry of Development of Information Technologies and Communications ‘due to a variety of business reasons and other circumstances.’ As a result of the sale, MTS expects to record a write-off of around RUB3 billion (USD45.74 million) in Q3 2016.

As noted by TeleGeography’s GlobalComms Database, MTS has had something of a chequered history in Uzbekistan. Its entry to the market in 2004 has been marred with accusations of corruption: in 2015 the US Department of Justice (DOJ) and Securities and Exchange Commission (SEC) launched an investigation into the matter, after Swedish journalists unearthed evidence of corruption at TeliaSonera’s local unit, UCell, in 2012. Having grown to become the nation’s largest mobile provider by subscribers, in July 2012 MTS was forced to close down its local unit – then operating as MTS Uzbekistan – amidst a slew of allegations from local authorities. MTS claimed that the allegations were false, and that it was the victim of a government shakedown, a fate shared by many foreign-owned companies in Uzbekistan. Indeed, two years later, MTS signed a deal with the government to re-enter the market via a joint venture with the state, relaunching services in December 2014.