MTS loses case against Turkmenistan on closure of business in the country

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MTS loses case against Turkmenistan on closure of business in the country - media

MOSCOW. June 19 (Interfax) - MTS lost a lawsuit against Turkmenistan in the case of the closure of its operations in the country, Law360, a specialized legal portal, reports.

The telecom operator had no right to continue to provide services in the region after the expiration of its contract, the portal said.

MTS initiated legal proceedings against Turkmenistan in 2018, filing a lawsuit with the International Center for Settlement of Investment Disputes (ICSID) at the World Bank. The reason for its filing was the forced suspension of the activities of the local wholly owned MTS subsidiary, MTS Turkmenistan, after the state-owned Turkmentelecom refused to renew the cooperation agreement with it in September 2017.

The case file states that the decision was issued on June 14, while the decision itself has not been published.

"MTS regrets that Turkmenistan was ultimately not held accountable in the course of these proceedings. The company is considering further legal measures to compensate for the damage caused by the actions of the state of Turkmenistan," the MTS press service told Interfax.

MTS operated in Turkmenistan from 2006-2010. In 2010, the local MTS subsidiary ceased operations due to the expiration of the shareholders' agreement with the country's Communications Ministry. The agreement had provided for the payment of 20% of the subsidiary's net profit to the state. MTS was able to resume operations via MTS Turkmenistan, a new legal entity which gave 30% of its net profit to the state-owned Turkmentelecom.

In September 2017, Turkmentelecom did not renew its agreement with MTS, which led to the disconnection of international and domestic long-distance zonal communication services and Internet access. The terms of the frequencies permissions issued to the MTS subsidiary had also expired by that time.

Initially, MTS estimated losses from the impairment of its assets in Turkmenistan at $750 million. Later, the company increased the damage estimate to $1.5 billion.