Georgia threatens to multiply Russia MegaFon fine

TBILISI, Sept 26 Fri Sep 26, 2008 8:57am EDT

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TBILISI, Sept 26 (Reuters) - Georgia threatened on Friday to keep increasing the heavy fine it has imposed on Russian mobile operator MegaFon for allegedly operating without a licence in the breakaway region of South Ossetia.

The decision was announced by Georgian telecommunications body GNCC on Friday and follows an initial clampdown announced two months before fighting broke out in the enclave between Russia and Georgia in early August.

"If MegaFon doesn't pay the fine, it will be doubled to 1 million Georgian lari ($713,216) and every time, when this case is considered by the GNCC, an additional 1 million GEL will be added," said GNCC spokeswoman Khatia Kurashvili.

In June, GNCC said MegaFon illegally operated in South Ossetia and ordered it to pay a $3,500 fine within 30 days - but it has since increased the figure dramatically.

MegaFon did not pay the original penalty and denied it operated on Georgian territory. It said it could not stop people accessing its services from base stations in nearby Russian regions.

"We do not render services in Georgia or South Ossetia," a MegaFon spokeswoman said on Friday.

Since the first fine, the festering stand-off in the region erupted into full-scale conflict. In early September, Moscow recognised the independence of the Tskhinvali-based separatists along with the second Georgian breakaway region of Abkhazia.

Last week, the GNCC raised the fine 10-fold to nearly $360,000, saying MegaFon had expanded its coverage during the fighting.

"The GNCC once again calls upon the International Telecommunication Union, GSM Association, and communication regulation administrations of all countries to take resolute measures to prevent the illegal activities of the Russian company MegaFon on the territory of Georgia," GNCC said.

MegaFon is Russia's third-largest mobile phone operator after MTS (MBT.N) and Vimpelcom VIP.N and is co-owned by the Nordic region's biggest telecom operator TeliaSonera (TLSN.ST), Alfa Group and billionaire Alisher Usmanov. (Reporting by Niko Mchedlishvili; Additional reporting by Maria Kiselyova in Moscow; Editing by Paul Bolding)

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