Mobile TeleSystems OJSC signed a settlement agreement with the Republic of Uzbekistan to resume operations in Uzbekistan through a joint venture with the government of Uzbekistan, MTS informed.
The agreement signed provides for establishment of a joint venture ("the Operator") with MTS holding a 50.01% in the charter capital of the Operator while the remaining 49.99% will belong to a state-owned unitary enterprise established and managed by the State committee for communications, development of information systems and telecommunications technologies of the Republic of Uzbekistan. The Joint venture will operate on the basis of assets, equipment and infrastructure, which were previously owned by Uzdunrobita FE LLC, a former subsidiary of MTS in Uzbekistan, and which will be transferred to this newly established joint venture.
The parties intend to finalize all procedures stipulated in the Settlement agreement, and to ensure commercial launch of the Operator`s mobile network by the end of 2014.
According to the Settlement agreement, the authorities of the Republic of Uzbekistan will grant the new operator 2G, 3G and LTE licenses, provide necessary frequencies and numbering capacity, ensure lease agreements for communication channels and issue all permissions required for the joint venture to operate and offer full telecommunications services throughout Uzbekistan.
Within the scope of fulfillment of the terms and conditions set out in Settlement agreement and transfer of a stake in the Operator to MTS the parties will submit a joint application to discontinue ongoing legal proceedings in the International Center for Settlement of Investment Disputes, Member of the World Bank Group (ICSID).
The Settlement agreement is governed by English law and provides for resolution of any disputes arising out of the Settlement agreement in the International Court of Arbitration under International Chamber of Commerce in Paris (ICC).
It will be recalled that MTS pulled out of Uzbekistan in 2013 after the local government raised a number of claims against the company. Thus MTS subsidiary Uzdunrobita was driven to bankruptcy.
In March 2014, MTS became aware of an investigation of MTS operations in Uzbekistan initiated by the U.S. Ministry of Justice simultaneously with another investigation initiated by the U.S. Securities and Exchange Commission. "The U.S. Ministry of Justice investigation also concerns MTS and is not solely related to the activity of third parties. MTS confirms its readiness to cooperate with the U.S. government authorities engaged in these investigations," MTS reported then.
According to previous reports, MTS received a request from the U.S. Securities and Exchange Commission to voluntarily submit the documents and information concerning MTS operations in Uzbekistan pursuant to the investigation of third parties' activities.
Mobile TeleSystems OJSC (MTS, tax number: 7740000076) and its subsidiaries provide services to about 100 million subscribers in Russia, Armenia, Belarus, Ukraine, and Turkmenistan. The company also provides fixed-line telephony and cable television services in all federal districts of Russia and in Ukraine.
The company's authorized capital is RUB 206.641 million, 2,066,413,562 common shares at par value of RUB 0.1 each are issued. Sistema JSFC owns a 50.8% stake in the company, 49.2% of the shares being in free float. 37.62% of MTS shares are traded on the NYSE as Level 3 ADRs.
US GAAP net profit of the MTS group for 2013 increased 2.7 times to RUB 79.84 billion from RUB 29.5 billion the year before. Consolidated revenue increased by 5% to RUB 398.4 billion from RUB 378.2 billion. Consolidated OIBDA grew by 8% to RUB 175 billion. US GAAP net profit of MTS for Q4 2013 grew by 16% to RUB 19.8 billion from RUB 17 billion the year before, consolidated revenue by 6% to RUB 104.8 billion. Consolidated OIBDA increased by 11% to RUB 45 billion, OIBDA margin by 1.8 p.p. to 42.9%.
RAS net profit of MTS for Q1 2014 grew by 55.8% to RUB 11.499 billion from RUB 7.379 billion the year before. Revenue increased by 9.7% to RUB 72.674 billion from RUB 66.238 billion, GP by 13.5% to RUB 35.871 billion from RUB 31.601 billion, pre-tax profit by 48% to RUB 14.447 billion from RUB 9.768 billion.