* Uzbek court unfreezes Russia mobile phone firm's assets
* Court orders to pay $600 mln in fines, upholds sentence on
* MTS CEO sees chance to resolve differences
* Analysts praise positive development, but fines too high
MOSCOW, Nov 9 An Uzbek court has overturned a
ruling confiscating the local assets of Russian mobile phone
operator MTS, offering hope it could yet restart
operations valued at $1 billion in central Asia's most populous
In a ruling handed down on Thursday, the court also ordered
MTS to pay around $600 million in fines within eight months and
ruled to bring in the operator as a civil defendant in a
criminal case against its four local employees.
But it overturned a previous judgement ordering the
confiscation of MTS assets. Previous fines had also totalled
MTS had appealed against the nationalisation of its Uzbek
assets after its operating licence was withdrawn earlier this
year and a 2.5-year "corrective" labour sentence imposed on its
MTS chief executive Andrei Dubovskov said in a statement
that the ruling cleared the way for moves to find a solution
that settled the previous differences and was "mutually
beneficial to all parties".
MTS, which had taken a $1.1 billion write-off in August in
connection with the Uzbek licence withdrawal, said it had yet to
decide on its next moves in Uzbekistan. But business daily
Vedomosti, which cited a source at MTS parent company Sistema
, said MTS was hoping the fines would be reduced.
The company has said it is just the latest foreign player to
be on the end of a "classic shakedown" by officials in the
gas-rich republic, pointing to the withdrawal of London-listed
Oxus Gold, U.S. firm Newmont Mining Corp and
Russia's Wimm-Bill-Dann, now part of PepsiCo.
Swedish telecoms operator TeliaSonera last month
started a legal review of its 2007 purchase of a licence in
Uzbekistan after allegations of wrongdoing related to that deal.
The most recent accusations, aired in a Swedish TV
programme, are that Telia bought its Uzbek 3G licence from a
firm reported to have close ties with the daughter of Uzbek
president Islam Karimov.
FINES TOO HIGH
MTS' Uzdunrobita unit accounted for 3.6 percent of MTS'
total sales and 4.5 percent of its operating income before
depreciation and amortisation last year. As recently as the
middle of this year it was the market leader with around 9
Analysts said that the chances of MTS returning to the
market were still low.
"It is premature to assume that MTS will restore its
operations in the country, as the $600 million fine seems too
high, given that it is almost half of the value of this asset,"
said Anna Lepetukhina, an analyst at Sberbank-CIB.
MTS spokeswoman Yelena Kokhanovskaya said a reserve it had
made previously as part of the $1.1 billion write-off would
cover potential fines.
Uralsib analysts said even if MTS managed to return to
Uzbekistan, it would still be unlikely to fully restore its
According to Russian market research firm AC&M, Vimpelcom
- MTS's main rival in CIS markets - increased its Uzbek
subscriber base to 9.2 million by the end of September from 7
million in June.
Uzbek officials could not be reached for comment.