Russian MTS Loses $140 Million, 2 Million Turkmens Lose Internet Connection
The saga of the abrupt closure of the Russian cell phone company Mobile TeleSystems (MTS) in Turkmenistan continues to unfold, with MTS now claiming $140 million in losses from its forced exit, the Russian daily Vedomosti reports, citing MTS officials.
As a result, more than two million customers in Turkmenistan are still without cell phone service -- and web connection. Last month, MTS removed its Russian employees from Turkmenistan, giving up hope that the standoff would be resolved, and filed several lawsuits in international arbitration courts. About 100 Turkmen communications engineers who used to work for MTS are now without work, and Altyn Assyr, the sole Turkmen state mobile provider, has been told not to hire them, the Turkmen Initiative for Human Rights reported.
In December, the contract expired for Barash Communications Technologies, Inc. (BCTI), the affiliate of MTS in Turkmenistan, and the Turkmen government refused to extend it. Authorities then began to seize BCTI's assets and President Gurbanguly Berdymukhamedov has talked about forming new national cellular communications companies with other foreign investors. Some regional observers theorized that the abrupt rejection of MTS had to do with the larger dispute with the Russian government and state energy monopoly Gazprom about the price of Turkmen gas and compensation for a gas pipeline explosion in 2009. Other analysts said that it was more about Turkmenistan's unhappiness with only 20 percent of the profits of the lucrative mobile business (in addition to taxes), and a desire to get 50 percent or more of the shares.
The Russian daily Izvestiya has also speculated that the Turkmen leadership was alarmed about the increasing uncontrollable Internet access for nearly half the population:
A possible reason for such a sharp change in relations between Turkmenistan's authorities and MTS is said to be the fact that the Russian operator essentially brought the free Internet to Turkmenistan. It is no secret that in the most closed of Central Asian countries, where all the media is completely under the government's control, before MTS, access to the Internet was possible only through a few Internet cafes, where passports had to be shown and where there was a severely limited list of sites allowed. MTS not only created a mobile communications network, but launched mobile access to the web in Turkmenistan. Obviously, controlling such a number of Internet users became problematic for Turkmenistan's security agencies.
After the abrupt shut-off of MTS, so many thousands of customers were queuing up at the offices of Altyn Assyr, the state's sole provider, that Interior Ministry soldiers were summoned to restrain them, TIHR reported. People were arriving as early as 3:00 am to get a place in line. Altyn Assyr was estimated to have about 300,000 of the country's mobile customers last year, and now may have as many as 400,000-500,000, but is performing poorly.
To cope with the crush, the government decided to offer cell phone service only to government workers and foreigners, with some war veterans and pensioners also included. Soon, the more enterprising clerks were selling the SIM cards for $100 on the black market, and finally authorities stopped sales completely and are now enabling only select groups to get coupons which will in theory enable them to buy SIM cards in the future. President Berdymukhamedov seized the opportunity to denounce Altyn Assyr's poor performance at a cabinet session March 30 and instructed a deputy prime minister to whip the company into shape.
The Central Bank of Turkmenistan froze BCTI's bank account in Ashgabat in January; Turkmen officials are telling MTS to sell them BCTI"s equipment, says Vedomosti, citing an unidentified source close to the company's shareholders, and offering such a low price that it would be cheaper simply to leave the hardware behind than pay to transport it out of Turkmenistan. MTS reportedly invested $250 million in Turkmenistan, Nezavisimaya gazeta reported. It's not clear how much the Kremlin is going to bat for MTS; Izvestia says MTS seems to be fighting its battles all alone and could use some government help; meanwhile Vedomosti quoted a spokesman from Prime Minister Vladimir Putin’s office who said Russia intended to defend the mobile company’s interests.
While the world's attention has been riveted to a series of uprisings in the Middle East in which millions are trying to claim their freedom after decades under authoritarian rule, Turkmenistan's blocking of the Internet for nearly half the population has gathered little attention, and MTS' tribulations do not seem to have resonated in the international business community.
Reports Without Borders (RSF), the Paris-based press freedom watchdog, has included Turkmenistan on its list of "Internet enemies". In a statement published on March 12, declared "World Day Against Cyber Censorship," RSF said the West has not sufficiently used its influence to press for greater Internet freedom in Turkmenistan.
"The international community seems more determined to make concessions than to exert any real pressure on this country, in view of its vast energy and strategic potential," says RSF.