MTS agrees to pay USD850m over former Uzbekistan operations

7 Mar 2019

Russia’s Mobile TeleSystems (MTS) has reached a resolution with the US Department of Justice (DoJ) and a settlement with the US Securities and Exchange Commission (SEC) relating to the group’s former mobile subsidiary in Uzbekistan. MTS announced yesterday (6 March 2019) that the agreements mark the closure of the anti-corruption investigations into the company’s acquisition and operation of its former Uzbek division during the period 2004 to mid-2012. In connection with the agreements, MTS will pay the aggregate amount of USD850 million – matching the figure it reserved in its Q3 2018 results announcement.

By entering into the DoJ resolution and the SEC settlement, MTS affirmed its commitment to ensuring that its business policies, processes and procedures strictly comply with all relevant anti-corruption legislation. In the resolution, the DoJ recognised MTS’ ongoing enhancements to its compliance programme and internal accounting controls. The Russian group stated: ‘MTS has systematically and pro-actively developed its current anti-corruption compliance framework in line with international best practices within a dedicated compliance division since 2012.’

TeleGeography’s GlobalComms Database says that in August 2004 MTS acquired a majority stake in Uzbek cellco Uzdunrobita, which adopted the MTS brand in June 2006. The operator’s licences were revoked in August 2012 following what was widely seen as an Uzbek state ‘shakedown’ of foreign-owned assets, and in August 2013 Uzdunrobita was transferred to the government. In July 2014 MTS signed a deal with the Uzbek authorities to re-enter the market, with the newly-formed Universal Mobile Systems (UMS) launching services in December that year, but in August 2016 MTS agreed to sell its UMS stake back to the government. International investigations meanwhile discovered that in 2004-2012 several major telecoms groups effectively paid indirect bribes to Uzbek officials in return for market entry, 3G/4G licences, subscriber base acquisitions and other valuable resources/permissions, with Gulnara Karimova, the now-imprisoned daughter of former president Islam Karimov, identified as a main benefactor.

Russia, Uzbekistan , Mobile TeleSystems (MTS), Universal Mobile Systems (UMS)

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