Russia’s Mobile TeleSystems (MTS) has reached an agreement with Alfa Group’s telecoms arm, Altimo, and Nomihold Securities to settle all disputes related to its investment in Kyrgyz mobile operator Bitel.
The agreement will see MTS, which bought a…
Russia’s Mobile TeleSystems (MTS) has reached an agreement with Alfa Group’s telecoms arm, Altimo, and Nomihold Securities to settle all disputes related to its investment in Kyrgyz mobile operator Bitel.
The agreement will see MTS, which bought a 51% stake in Tarino – believed to be Bitel’s indirect owner – in 2005, receive a payment of up to US$150m, according to a company statement. Of this, MTS, Russia’s largest mobile operator, said it has already received US$125m.
The telco said the agreement brings to an end all legal proceedings in connection with the matter, and will “fully discharge” MTS of its obligations set by the London Court of International Arbitration (LCIA) in 2011 and settle additional arbitration proceedings and a tort action in the English courts.
“Altimo and MTS have acknowledged the importance of finding a commercial solution that will allow them to focus fully on their goals of developing their respective telecommunications markets throughout the world,” MTS stated.
Just days after MTS’s acquisition of the 51% stake in Tarino was announced in 2005, Russian company Rezervspetsmet, said to be related to Altimo, challenged the deal in court, claiming to be Bitel’s rightful owner. The court upheld the claim and Rezervspetsmet transferred all Bitel assets to Sky Mobile, a subsidiary of MTS’ rival VimpelCom, in which Altimo is the largest shareholder.
In 2010, an arbitration court compelled MTS subsidiary MTS Finance to buy the remaining 49% stake in Tarino held by Nomihold Securities, a unit of Kazakhstan’s Alliance Capital, for US$170m plus interest, US$5.88m in dividends and to compensate it for related costs.
In March this year, a civil court case on the situation kicked off in the Isle of Man, a self-governing dependency of the British Crown, with MTS reportedly seeking US$800m in damages.
An Altimo spokesperson confirmed the agreement to resolve the issues has been reached, saying it “means that long-lasting dispute is over and we are satisfied with it”.
