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Millions Of Uzbek Customers Left Without Mobile-Phone Service

  • Charles Recknagel

Mobile-phone customers line up for new call numbers after suspension of Uzbekistan's largest mobile-phone provider.

Mobile-phone customers line up for new call numbers after suspension of Uzbekistan's largest mobile-phone provider.

The Uzbek government and the country's largest mobile-phone provider have traded accusations after millions of customers were left without service.

The operating license for Uzdunrobita -- the Uzbek subsidiary of Russian cellular phone operator MTS -- was suspended on July 17 for 10 days. Uzdunrobita complied with the order later that day, leaving the company's declared 9.5 million subscribers with no option but to enlist with a rival operator if they wanted to use their mobile phones.

The way in which Uzdunrobita carried out the order, however, was not to the liking of the Uzbek government. Amid the outcry from customers, the Communications Agency on July 18 accused Uzdunrobita of violating the order by shutting down all of its operations at once rather than in steps, which would have provided average customers uninterrupted mobile service for three days.

MTS, in comments to Interfax, has said doing so would have contradicted Uzbek telecoms laws that make no allowance for suspended telecoms companies to provide services. At any rate, the company told the news agency, it could not do so because Uzbektelecom -- the state-owned company that monopolizes the channels it leases -- suspended its leasing contracts.

Left without coverage, customers rushed to get new private and business phone numbers and then painstakingly try to reconnect with relatives, friends, and customers.

"People are rushing to other companies. Panic is everywhere. People don’t know what to do, how to communicate with each other," says Bobur, an Uzdunrobita subscriber from the northeastern city of Sirdaryo. "They don't know each other's new numbers. No information is available."

Little Sympathy

The rush for new numbers has created huge lines at the offices of the countries' four other mobile operators as Uzdunrobita's customers register for new numbers.

It also raises questions about whether Uzbekistan's four remaining mobile providers can absorb so much demand. Uzdunrobita had a 40 percent share of Uzbekistan's 25 million-subscriber mobile phone market.

Prior to the July 18 accusations against Uzdonrobita, the government had shown little sympathy for those who would be disrupted by the suspension.

Speaking to RFE/RL's Uzbek Service just hours before the suspension went into effect on July 17, one official simply urged subscribers to find alternatives.

"MTS is not the only company providing mobile-communications services. There are four others," said Shukrat Atamuhamedov, deputy division chief of the Uzbek Communications Agency. "It is possible to get a new number by 18:00 today and share it with friends and relatives, isn't it?

The suspension was announced just hours before it was to go into effect.

In an effort to keep its customer base from now abandoning it, Uzdunrobita has announced it will not charge its subscribers during the 10-day suspension period. However, the company's ability to communicate with customers has been limited by the sudden and unexplained crash of its own website, leaving only Facebook as an interface.

Bitter Dispute

The 10-day suspension comes as the Uzbek government and Uzdunrobita are locked in a bitter dispute over Tashkent's investigations into its business activities.

The government claims that inspections conducted since the spring of this year by the prosecutor's office and tax authorities have found improper use of cash, theft of property, as well as illegal schemes for cashing funds and evading taxation.

The prosecutor-general has launched a criminal case against a group of company officials, including Uzdunrobita general director Bekzhod Akhmedov.

MTS has countered by sending an official appeal to the Uzbek leadership to take action against the "gross violations" of the country's laws in regard to Uzdunrobita.

The company has also protested the arrests of Uzdunrobita employees and claims its lawyers are barred from representing them in interrogation procedures.

Amid the dispute over the investigations, speculation abounds in Uzbekistan over why the government has moved so forcefully against the company.

Some speculation sees the dispute as an Uzbek-Russian showdown tied to rising tension between the countries. Tashkent, which in recent years has sought to improve ties with the West, last month suspended its membership in the Moscow-dominated Collective Security Treaty Organization (CSTO).

But other speculation centers on the ownership history of Uzdunrobita itself.

Belonged To President's Daughter

Before it was sold in 2004 to MTS, Uzdunrobita belonged to Gulnara Karimova, the powerful daughter of the Uzbek president. Since 2004, its value has soared as the total number of Uzbek mobile-phone subscribers has tripled in a growth market. Now, some suspect, powerful members of the Uzbek elite may want it back.

Interfax quotes a source in the State Communications Inspectorate this week as saying privately that the inspectorate would never have decided to suspend Uzdunrobita's license "without pressure from above."

It remains unclear what will happen to Uzdenrobita after the current 10-day suspension ends. The government has yet to say whether the suspension could be renewed or what steps follow.

But the pattern of moves against Uzdunrobita already put it in the company of several other major privately owned businesses whose fates cannot help but worry MTS.

In recent years, Tashkent has investigated the country's two biggest cement factories, both owned by Kazakhstan's United Cement Group. One of the factories, Kuvasay, has since had to transfer 51 percent of its shares to the government. The other, Bekabad, remains under investigation for tax problems.

Similarly, the Indian company Spentex found itself declared bankrupt after a government investigation and saw its assets transferred. The company is now seeking $100 million in compensation from the Uzbek government.

Whatever the ultimate fate of Uzdunrobita, its parent company MTS can now expect a tough fight. But the battle will not be the first of its kind for the Russian telecommunications giant.

In 2010, MTS ran afoul of the Turkmen government in a dispute that saw its license revoked permanently in that country. The revocation forced the Russian company to write off an investment of some $140 million.

The current suspension of Uzdunrobita's license is not likely to damage MTS much financially, however. According to MTS data, Uzdenrobita accounts for 3.5 percent of MTS's total revenue.

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