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FRIDAY, March 6, 2015

Central Asia

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Russian cell phone provider faces $500M loss after Turkmen shutdown

Russian cell phone provider MTS faces $500 million in losses in dispute with the Turkmen government

Thursday, December 23, 2010 - Russian-led operator Mobile TeleSystems (MTS) Turkmenistan could lose more than half a billion dollars in lost profits if it is forced to terminate subscriber contracts and dismantle its network, analysts said Wednesday.

Experts at Troika Dialog investment bank outlined that bleak prospect to investors after the Turkmen Ministry of Communications ordered MTS to discontinue subscriber contracts and tear down 90 percent of its mobile network in the country.

"Under a worst-case scenario whereby MTS would have to cease operations in Turkmenistan, we estimate the value destruction at $500 million to $600 million," the Moscow Times news agency Wednesday quoted analysts Yevgeny Golossnoi and Anna Lepetukhina at Troika Dialog, the largest investor bank in the Commonwealth of Independent States (CIS).

MTS Chief Mikhail Shamolin on Wednesday estimated the company “may have a $160 million loss next year from halting Turkmen operations,” according to the news agency.

The government suspended the license of the country’s biggest mobile operator for a month starting Tuesday. It ordered the company to start dismantling its network from January 1 and refused to prolong its right to use frequencies, Shamolin said.

MTS has threatened to seek damages if its talks with Turkmen regulators go nowhere.

"MTS has met all the state and licensing requirements and we don't see any legitimate reasons for the suspension," the company said in a statement.

In a statement to the media on Tuesday, MTS said it has filed a case with the International Chamber of Commerce and the Turkmen courts against what it says are contract violations committed by the Ministry.

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