The longstanding conflict between the Turkmenistan government and Russian mobile operator Mobilnie TeleSistemy (MTS) has finally been resolved. MTS renewed operations in Turkmenistan after over a year and a half hiatus, according to the company’s press-service. Now the authorities will be getting a 30% cut of the profits compared to 20% in previous agreements. The history of MTS’ operations in Turkmenistan is a complicated one; MTS subsidiary Barash Communication Technologies, Inc. (BCTI) was the first and largest mobile operator in Turkmenistan, opening offices in 1994 and by 1999, providing mobile services to Ashgabat and all regional capitals of the country, and continuing to grow and expand its services. By late 2010, 2.4 million individuals in Turkmenistan relied on MTS for access to mobile connection and the Internet, but on December 15 of that year, MTS received notification from Turkmenistan’s Ministry of Communications of a one-month suspension of its license and on December 21, MTS suspended its services in Turkmenistan and 2.4 million people lost access to mobile phones and the Internet. On the same day the head office of MTS in Russia announced that the company had filed a lawsuit at the International Court of Arbitration against Turkmenistan.
On January 21, 2011, the day when the suspension was expected to end, MTS Turkmenistan was unable to resume its services, and the company’s head office in Russia issued a statement saying that the company had offered to negotiate a settlement with the Turkmen government and resume work in Turkmenistan. On January 22, Turkmenistan’s Minister of Communications, Ovliaguly Jumaguliev, stated that MTS’s five year agreement allowing it to work in the country had expired in December of 2010, and claimed that Turkmenistan will defend its interests in international courts. The Ministry demanded that MTS Turkmenistan annul all of its contracts with users, settle its bills and dismantle its equipment. MTS filed a number of lawsuits against Turkmenistan estimating damages at 585 million USD. On March 3, 2011, MTS distributed an open letter among the participants of the conference “Turkmenistan Oil & Gas Road Show” in Singapore, warning them of risks involved in investing in Turkmenistan’s economy. Turkmenistan’s Foreign Ministry called these actions “unscrupulous and low,” while the Russian Foreign Ministry called on Turkmenistan “to respect the interests of the Russian investor working in good faith,” stressing that Russian authorities will continue to support the company.
Nineteen months have passed, leaving individuals, businesses, and state agencies in Turkmenistan restricted to using the poor services of Turkmenistan’s national operator Altyn Asyr, which despite many presidential orders to improve services has been unable to do so. According to some reports, the growing outcry over the quality of Altyn Asyr services influenced the decision to allow MTS to return to Turkmenistan. In May 2012, MTS managed to resolve the issue following a May 2 meeting with Turkmenistan’s President Gurbanguly Berdymukhamedov. At that time, Vladimir Evtushenkov, the chairman of the board of MTS’s major share holder, the financial corporation “Sistema,” announced that MTS would resume its work in Turkmenistan, and that the company had received the necessary licenses. Today, MTS has concluded a five year agreement with the State Communication agency Turkmentelecom, with the possibility of a five year extension. MTS-Turkmenistan is to pay Turkmentelecom 30% of their net profits calculated in accordance with accountancy rules of Turkmenistan, while previously it paid 20%. MTS and its subsidiary BCTI, Turkmenistan’s Ministry of Communications, and Turkmen national mobile operator Altyn Asyr, also signed a settlement agreement resolving complaints about the termination of the work of MTS in Turkmenistan in December 2010. According to the company’s statement, MTS’ infrastructure in Turkmenistan will enable the company to provide services for more than 2.4 million users.
Prices continue to grow in Turkmenistan, with the average cost of a studio apartment in Ashgabat increasing to 50,000 USD compared to 40,000 USD last year. This price increase comes despite recent evidence that the buildings will not be able to withstand heavy rains and have become flooded after recent storms, and many of them are subject to a bedbug infestation. Meanwhile, there are presidential decrees to increase construction of new buildings as well as 78 new bridges on two highways. On a photo published by Trend.az, which ran the report on the bridge construction, the roads are empty, which makes sense – unemployment is high, and the population poor – with few owning cars.
Recently Berdymukhamedov has started to speak more frequently about privatization. For instance, at a governmental meeting he stressed the importance of developing entrepreneurship in the agro-industrial complex, as well as transferring other facilities, including the Health Path, into private hands. It is possible the President may recognize that state controlled companies are inefficient in running these key sectors. At the same time, his tendency to micro-manage and the cronyism in state administration complicate the role that private enterprise can play in this system.
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