Moscow, Russian Federation – Mobile TeleSystems OJSC (“MTS” – NYSE: MBT), the leading telecommunications provider in Russia and the CIS, announces that the Company has suspended its operations in Turkmenistan in accordance with the notice from the Ministry of Communications of Turkmenistan received by MTS on December 15, 2010. The notice informed the Company of a decision to suspend licenses held by Barash Communications Technologies, Inc. (“BCTI”), MTS’ wholly-owned subsidiary in Turkmenistan, for a period of one month starting from December 21, 2010.
The Company has brought legal actions against the Ministry of Communications of Turkmenistan in the International Court of Arbitration at the International Chamber of Commerce in connection with a number of breaches by the Ministry of the trilateral agreement1 (“Agreement”) and in the Arbitration Court of Turkmenistan in connection with aforementioned decision to suspend BCTI’s licenses. In addition actions were brought by BCTI in the International Court of Arbitration at the International Chamber of Commerce against TurkmenTelecom and Altyn Asyr – both state-owned telecom operators, in connection with their alleged termination of the interconnection agreements with BCTI. MTS management is continuing negotiations with the Ministry of Communications and officials of the Government of Turkmenistan to resolve the situation amicably and continue its operations in Turkmenistan.
As was stated previously, the Company at all times had reasons to believe that the Agreement would be extended and had approached the Ministry of Communications within the required timeframe to formalize the extension. However, the Ministry of Communications failed to grant the extension in accordance with the terms of the Agreement.
In any event, it is the Company’s opinion that the expiration of the Agreement does not preclude MTS from continuing its operations in Turkmenistan nor can any alleged termination of the Agreement serve as the basis for suspension of BCTI’s licenses, and that the notice must have been given as a result of misinterpretation of local laws and regulations by the Ministry of Communications of Turkmenistan.
The Company shall vigorously defend its legal rights and investment interests.
* * *
For further information, please contact in Moscow:
Joshua B. Tulgan
Director, Investor Relations
Acting Director, Corporate Finance
Department of Investor Relations
Mobile TeleSystems OJSC
Tel: +7 495 223 2025
Learn more about MTS. Visit the official blog of the Investor Relations Department at www.mtsgsm.com/blog/
* * *
1MTS has been operating in Turkmenistan under a trilateral agreement signed in November 2005 by BCTI, MTS and the Ministry of Communications of Turkmenistan, which expires on December 21, 2010, unless extended pursuant to its terms and conditions. As has been disclosed in the Company’s 20-F filings for the years 2005-2007, in accordance with certain provisions of this agreement, BCTI shares net profit derived from its operations in the country with the Ministry of Communications of Turkmenistan. The amount of shared net profit is calculated based on the financial statements prepared in accordance with local GAAP subject to certain adjustments. Under the terms of the agreement, BCTI shared 49% of the net profit since the date of acquisition through December 21, 2005, and 20% of the net profit commencing December 21, 2005.