Turkmenistan May Shut Down Russian MTS Mobile Service
MTS Turkmenistan, the Turkmen branch of the Russian mobile company MTS (Mobile TeleSystems), the largest cellular operator in Russia and the Commonwealth of Independent States, received a notice from the Turkmen Ministry of Communications yesterday telling them that their license was suspended effective today, regnum.ru reported.
No explanation was given.
The notice said that "communications and Internet services in Turkmenistan may be suspended for a period of one month," and express payment and pin codes would also no longer be activated.
MTS suffered some outage earlier this month where Internet connection was lost, but reported that it was due to an accident at a switching station.
In 2005, Barash Communications Technologies, Inc. (BCTI), a U.S.-owned company which was founded in Turkmenistan in 1994, and MTS signed an agreement with the Turkmen Ministry of Communications, under which the government received 20 percent of the profits. That agreement expires today.
MTS has grown rapidly and has more than 2.4 million customers in Turkmenistan, a largely desert-covered country with a population of over 5 million, controlling 85 percent of the market. The Turkmen government company Altyn Asyr has only 310,000 customers.
Why wouldn't the government of Turkmenistan make sure that this agreement was renewed so they could keep getting their healthy 20 percent cut?
It's unlikely because they want to shut off people's mobile web connection so they wouldn't see WikiLeaks cables about Turkmenistan, and more likely that Ashgabat just hasn't come to terms with the Russian company. Relations with Russia have soured this year with Gazprom slashing its gas purchases after the gas pipeline explosion controversy in April 2009 and the global recession. Yet the Turkmen leadership has very good relations with some Russian companies it likes, i.e. Itera, which gifted the president with a yacht, and with Tatarstan and other republics fulfilling large orders for ships, tractors and heavy equipment.
The independent Uzbek news site fergananews.com (formerly ferghana.ru) citing the Russian news site Vremya Novostei (going out of business under that name), reported earlier this month speculation that the Turkmen government may be trying to get MTS Turkmenistan to sell 50 percent of its stake to the Turkmen Ministry of Communications.
Apparently a condition of extending the license until 2012 was obtaining 51 percent control of MTS Turkmenistan, or else the license would be suspended and equipment seized. MTS did not confirm that any such pressure was being put on their company. In November, customs agents seized a large number of SIM cards, mobile devices and other equipment from NTS, and then a processing center in Ashgabat was flooded, says Vremya Novostei. Authorities in Dashoguz demanded that MTS turn off the fiber-optic line connecting all of Turkmenistan. MTS had to cancel its roaming service. Vremya Novostei speculated that the Turkmen government grab was caused by plunging revenues after Russia's sharp decrease of gas purchases.
At chrono-tm.org, Turkmen Initiative for Human Rights discusses various other rumors circulating about a possible takeover of MTS by the Turkmen government. There is talk that other Russian operators, Megafon and Bee-line, may be asked to take MTS' place; or that BCTI may essentially be nationalized. The equipment has been sealed by authorities and will not be able to be removed from Turkmenistan.
According to one story, the Turkmen government is planning to take over the company and hand over all its equipment and customers to Enex, a firm registered in Brussels, reportedly headed by Koen Minne, a Belgian lawyer who is considered an "honorary consul" for Turkmenistan in Belgium and the European Union; he has met repeatedly with President Guranguly Berdymukhamedov. Enex has delivered electrical equipment to Turkmenistan in the past.
According to another story, a Chinese company may take over MTS Turkmenistan, but that could also involve a deal between Enex and Chinese businessmen who would form some kind of new venture.
There is no confirmation of any of these rumors, but observers believe it will follow the pattern such seizures have followed in Russia and Central Asian countries in the past -- first, the license is seized, then various infractions and fines and debts are found, then the property has to be nationalized to pay the fines, then the company is sold off to a chosen insider.
MTS has grown rapidly in recent years and has proved very popular with Turkmens, who have found in principle the Russian mobile phones give them more flexiblity with communications with the outside world than state-run Internet providers which block social-media and opposition news sites, although experience has shown over the years MTS can be blocked, too.