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Telia settles “unfortunate” Uzbek saga, sells Turkcell stake

Telia settles “unfortunate” Uzbek saga, sells Turkcell stake

Telia has paid almost $1 billion to settle the investigation into its activities in Uzbekistan.

The probe by the US Department of Justice (DoJ) and Securities and Exchange Commission (SEC) – along with Dutch and Swedish authorities - commenced three years ago, and found the operator guilty of offering around $330 million in bribes to gain itself a foothold in the Uzbek market in 2007.The operator’s Uzbek subsidiary Coscom – branded as Ucell – pleaded guilty to the DoJ, while Telia’s activities were deemed an infringement of the US Foreign Corrupt Practices Act and Dutch legislation.

Telia has agreed to pay $965 million to bring the episode to a conclusion. Last year, it was offered a $1.4B settlement by the the US and Dutch authorities, but deemed this “very high”. Earlier this year, Telia was able to divest its holding in Tajikistan’s Tcell – part of a group-wide strategy to pull out of Eurasia, undoubtedly influenced by the Uzbekistan controversy – and following this sale the operator stated that it expected to settle for around $1 billion.

The Swedish group’s president and CEO Johan Dennelind described the settlement as “an end to an unfortunate chapter in Telia Company’s history”, adding “since 2013, the new board and management have worked diligently and responsibly to understand what went wrong, to remedy what has been broken and to regain trust from all our stakeholders.”

“We have come a long way to establish a more sustainable company with a strong focus on governance and compliance but it is a never ending journey as we aspire to embed this into our culture making sure that all employees understand the importance of doing the right thing all the time.”

As part of the group’s exit from Eurasia, Telia has also reduced its holding in Turkish operator Turkcell, selling a 7% stake to institutional investors for TRY1.8 billion ($514 million). These were the last shares that Telia held directly in the Turkish operator, although it still has a 24% indirect holding via its stake in Turkcell Holding, meaning that Telia is still the largest single shareholder in Turkcell.

Dennelind said: “The sale of the remaining directly owned shares in Turkcell is in accordance with the strategy to focus on operations in the Nordic and Baltic countries. Telia Company will continue to be the largest shareholder in Turkcell and continues to work hard to find solutions to the ownership lock and to restore effective corporate governance.”

Telia’s divestment of its non-core assets saw it shift a 7% stake in Turkcell in May this year, while speculation is mounting that it could reduce its holding in Russia’s MegaFon. The operator’s most recent financial statement (H1 2017) noted that its Eurasian holdings were all “available for immediate sale”, with the goal of divesting all of them by the end of 2017.

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