MTS in Kyrgyzstan legal dispute

MTS in Kyrgyzstan legal dispute

15 MAR 2013

Russian operator MTS said that it is facing legal action over an earlier deal concerning Bitel, an operator in Kyrgyzstan.

Nomihold Securities, the seller of Bitel, has obtained permission to serve proceedings from the English Commercial Court. It is alleging a number of wrongdoings, relating in part to a recent arbitration between it and an MTS subsidiary, and is calling for compensation “exceeding $215 million”.

MTS denied any wrongdoing, stating that the Nomihold claims are “without merit and inadmissible before the English courts”. It said it is considering its legal position.

MTS announced a deal to acquire a 51 per cent stake in Tarino Limited from Nomihold in 2005, believing that Tarino was the indirect owner of 100 per cent of Bitel.

A deal was also put in place giving MTS an option on the remaining 49 per cent interest in Tarino.

However, upon completion of the deal, Bitel’s corporate offices in Bishkek were seized by a third-party on the basis of a court decision, which resulted in MTS losing control over the operator.

In March 2007, MTS wrote-off costs of $150 million related to the deal, and recorded a liability of $170 million related to the option for the remaining 49 per cent.

In January 2011, the arbitration court made an award in favour of Nomihold, and ordered MTS to pay around $210.8 million.

MTS recorded a total liability in the amount of $214 million in its accounts for the year to 31 December 2011.

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