Court frees up assets of Russia's MTS in Uzbekistan

Fri Nov 9, 2012 3:02am EST

* MTS CEO says "contented" that company's arguments were heard

* Analysts say MTS unlikely to fully restore Uzbek business

MOSCOW Nov 9 (Reuters) - An appeal court in Uzbekistan has overturned an earlier court ruling to confiscate all assets owned by Uzdunrobita, the Uzbek subsidiary of Russia's top mobile phone operator MTS, but ordered it to pay $600 million in fines, the company said.

The Appeal College of the Tashkent Criminal Court, however, upheld a 2.5 year "corrective" labour sentence imposed on four Uzdunrobita managers plus a further three-year ban on them returning to business.

MTS, part of oil-to-telecoms conglomerate Sistema , in August took a $1.1 billion write-off in connection with the withdrawal of its Uzbek operating licence following the arrest of four of its managers on criminal charges.

The Russian company has said its business in Uzbekistan has suffered an unwarranted attack of the type that had forced out other foreign investors such as London-listed Oxus Gold.

Since June, MTS has gone from market leader in Central Asia's most populous state, with 9.5 million clients, to being effectively shut down.

MTS Chief Executive Andrei Dubovskov said: "We are contented that the MTS arguments during the court processes were heard and partly satisfied." This demonstrated the possibility of searching mutually acceptable ways of resolving the situation, he said in a statement issued late on Thursday.

The $600 million fine can be paid in instalments within the next eight months.

"The cancellation of nationalisation of assets belonging to MTS's Uzbek subsidiary is positive for the stock," Uralsib analysts said in a note. "Though the chances of resuming operations in the country are low, and even if it manages to do so, it will still be unlikely to restore its market positions in Uzbekistan fully."

Uzbek officials could not be immediately reached for comment.

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