Ad Hoc Notice
2 August 2012
Moscow, Russian Federation – Mobile TeleSystems OJSC (“MTS” – NYSE: MBT), the leading telecommunications operator in Russia and the CIS, announces that the Prosecutor’s General Office of Uzbekistan and the State Agency for Communications and Information of Uzbekistan (the “SACI”) are preparing to bring groundless charges of “engaging in activity without a license” and “illegal activities of the branches without individual licenses” against Uzdunrobita FE LLC (“Uzdunrobita”, “MTS-Uzbekistan”), MTS’s wholly owned subsidiary in Uzbekistan”. These charges contradict official documents, including documents issued earlier to Uzdunrobita by the SACI.
In the Company’s opinion, these unsubstantiated and contradictory allegations cannot serve as a basis for the General Prosecutor’s Office public claim of enormous damages allegedly incurred by the Republic of Uzbekistan as a result of Uzdunrobita’s operations in the country. These allegations cannot be used by the authorities to later charge Company with any financial or tax claims.
At Company’s disposal are official documents issued by the SACI confirming that the SACI was fully aware of the legal structure of Uzdunrobita when the Company was issued a license in 2004. The documents confirm that the license agreement applied to all branches (filials) of Uzdunrobita irrespective of their legal form prior to MTS’s acquisition of the controlling stake in Uzdunrobita in 2004.
- Uzdunrobita was established in 1991. Prior to November 1997, a 55% stake was owned by SACI. From November 1997 to March 2002, the SACI held a 49% stake in Uzdunrobita. In March 2002, ownership of the stake was transferred to the State Property Committee of Uzbekistan.
- As expressly set out in the licensing agreement signed between Uzdunrobita and the SACI in 2004, 12 branches (filials) of Uzdubrobita were established before 1997, at a time when the SACI held a controlling stake in Uzdunbrobita. Three more branches (filials) were established at a time when the SACI held a 49% stake in Uzdunrobita prior to MTS’s acquisition of a controlling stake. Since the MTS’s acquisition of Uzndunrobita, the filial structure has remained. Therefore, the SACI, which granted a license to Uzdunrobita in 2004, had itself created and further authorized the use by the Company of the aforementioned business structure. Furthermore the SACI must have been familiar with the Company’s filial structure, their legal forms and the business structure applied by the Company.
- A licensing agreement issued by the SACI to Uzdunrobita in 2004 directly states that the license, during its tenor, applies to all branches of Uzdunrobita irrespective of the time when these branches were established. To emphasize this fact, a list of branches (filials) in question was attached to the license agreement as an addendum. Similar provisions are present in the conditions of license agreements issued to the company in 2002 and 2003.
- In 2001, the SACI, writing in an official letter to Uzdunrobita, confirmed that, in accordance with the laws of Uzbekistan, the single Uzdurobita’s license applied to and covers the operations of all of the branches of the company.
- All licensing agreements between the SACI and Uzdunrobita were signed by Mr. Abdullah Aripov, General Director of the SACI at that time, who currently serves as Deputy Prime Minister of Uzbekistan.
Audits of Uzdunrobita with respect to compliance with the licensing requirements have been conducted by the State Inspection for Communications (SIC) for many years, and they have also confirmed that the license extends to all of the regional branches of Uzdunrobita. According to the information available in the market, other companies active in Uzbekistan also operate under similar structures and under one license.
In the Company’s opinion, the on-going audits of MTS-Uzbekistan’s financial and operating activities conducted in gross violation of Uzbekistan law, the illegal suspension of Uzdunrobuta’s license, application of tactics of intimidation against Uzdunrobita’s employees, including their detainment and arrests, and the seizure of assets prior to the official completion of any investigation, are parts of an unwarranted attack on MTS’s legitimate investments and are being orchestrated by certain influential entities in Uzbekistan as a prelude toward the seizure and expropriation of the Company’s assets in the country.
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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/