MTS, Russia’s largest mobile company, had its local Uzbekistan subsidiary seized by authorities and four of its manager’s sentenced following a court verdict on 17 September, reports Bloomberg. The court had ordered MTS’s assets seized 31 August after a criminal investigation that cleared the way for for the nationalization ofUzbekistan’s top mobile service, in what the Russian telecom giant is calling a “massive shakedown”.
The actions follow a three-month crackdown that has according to Reuters, “reinforced the country’s reputation as one of the most hostile environments for foreign investors in the formerSoviet Union.”
Authorities froze $700 million in assets belonging to MTS subsidiary Uzdunrobita on 17 July, revoking its license for a ten day period that left up to ten millions users – one third of Uzbekistan’s population – without mobile service. MTS’s license was revoked permanently 13 August.
MTS claims that the verdict was orchestrated, as evidenced by trial’s tight timetable, the unlawful refusal to allow the company to defend its rights and interests, and the violations admitted as part of the investigation. Three-year suspended sentences were handed to the four local managers, and the country issued an arrest warrant for former top manager Bekhzod Akhmedov for fraud and money laundering.
MTS raised concern that the arrested were pressured into signing false confessions, and denied access to lawyers, charging that, “the investigations and court proceedings were in breach of existing international norms and human rights,” reports TotalTelecom.
When Uzbekistan suspended MTS’s license in July, it sparked an exodus of mobile users from the Russian phone provider. Uzbekistan News reported queues of hundreds seen outside shops selling SIM cards as prices tripled. The impact that this recent seizure will have is not yet known, but as MTS’s Michael Hecker told Reuters, competitors in theUzbekistan market will not be able to fill the gap. MTS’s 9.5 million customers could be cut off from communications, and worse, emergency services will be compromised.
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