Russian mobile telecoms company Mobile TeleSystems (MTS) is in danger of losing its licence for the Uzbek market, after a series of actions by the Uzbek authorities including a threat to revoke the licence over poor service, a complaint about the company's use of mobile masts, and a fraud probe that has caused its former director to flee the country.
According to reports in the Uzbek press, the State Communications Inspectorate may strip MTS-Uzbekistan of its licence after receiving alleged complaints from customers about its poor quality of service.
MTS-Uzbekistan, which has been active in Uzbekistan since 2008 and has around 9.5 customers, is also being investigated by the government after fraud allegations. And it has come under fire from government officials who say it does not have the necessary authorisation to use 48 mobile base stations in Uzbekistan.
Former director Bekhzod Akhmedov is belived to have fled the country after the fraud accusations surfaced.
An MTS spokesperson told AP that the company saw no reason for the Uzbek authorities to revoke its licence and that it has already submitted documentation for most of the 48 base stations.
The news comes just six weeks after MTS achieved a breakthrough in another Central Asian country, when the company struck a deal to return to Turkmenistan. Its Turkmen subsidiary lost its licence in December 2010, but after MTS officials reached agreement with the Turkmen government services are due to be restored within the next two to five months.
Uzbekistan is a much larger market than Turkmenistan, given the country's 29.5 million strong population - the largest in Central Asia. Poor fixed line coverage, with services covering only around 7% of the population, has also caused rapid growth in the mobile telecoms market. After a leap in subscriber numbers in 2008, the mobile subscriber base has been growing by around 30% a year, with penetration reaching around 80% in early 2011.
However, international companies operating in Uzbekistan have faced numerous problems in recent years, despite insistences from Tashkent that the government wants to promote international investment. Oxus Gold, one of the longest-standing investors, announced in 2011 that it was being forced out of the Amantaytau Goldfields joint venture by its Uzbek partners. Also in 2011, the Turkish-owned Turkuaz shopping centre was raided by security forces; several of its employees beaten by police and goods were confiscated. A documentary broadcast on Uzbek state television later accused 50 Turkish businesses of promoting the Islamic Nurcu movement and involvement in terrorism.