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MTS Faces ‘Significant’ Loss From Uzbek Subsidiary, Tulgan Says

OAO Mobile TeleSystems, Russia’s biggest mobile phone company, faces a ‘significant’ loss from its operations in Uzbekistan after the nation’s authorities removed its license.

“We are looking at a significant loss of value in Uzbekistan,” Joshua Tulgan, director of investment relations at MTS, as the Russian company is known, said by phone from Moscow. “We are discussing possible scenarios for our second-quarter disclosure.”

MTS invested about $1.5 billion in the Uzbek unit, he said. The company is scheduled to report second-quarter earnings on Aug. 28, Tulgan said.

Uzbekistan froze the company’s license on July 17, saying MTS violated its permit and didn’t pay enough taxes. The authorities prolonged a suspension of MTS’s local unit’s license for three months from July 30, the company said in a July 29 statement. The unit’s acting chief financial officer and three other employees have been imprisoned since mid-July, Tulgan said.

“Four of our colleagues remain imprisoned, and we are actively seeking their release,” Tulgan said. “We are considering legal strategies but right now it is too early to comment on any definitive steps.”

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