MTS pulls out of Uzbekistan after corruption investigation

The US investigation into its activities in Uzbekistan has prompted MTS to sell its majority holding in Uzbek operator Universal Mobile Systems (UMS) to the country’s government.

The Russian operator’s activities in the market had been linked to corruption, resulting in an investigation being launched in November last year by the US Department of Justice (DoJ) and SEC.

The probe was part of a broader inquest into corruption allegations relating to three of the country’s operators – MTS, TeliaSonera and VimpelCom. MTS in particular was singled out by the DoJ over a claim that the operator bribed a government official in order to enter the market.

MTS confirmed in a statement that its entire 50.1% holding has been acquired by the State Unitary Enterprise Centre of Radio Communications - the branch of Uzbekistan’s IT Ministry that owns the remaining half of UMS. The Russian firm originally obtained the stake for free in 2014. The divestment means that MTS will have to write roughly RUB3 billion ($46 milllion) off from its Q3 results.

Andrei Smelkov, MTS VP and director of the operator’s foreign subsidiaries business unit, confirmed: “Due to a variety of business reasons and other circumstances, MTS decided to sell its stake in the joint venture UMS LLC.”

According to reports, the US investigation was not a deciding factor in the decision to sell up.

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