GSM Storm
// Alfa Group has stormed MTS
Corporate Conflict
The conflict between MTS, controlled by Sistema, and Alfa Group for the ownership of Bitel, Kyrgyzstan’s sole GSM-operator, has taken a new, coercive, turn. After the Kyrgyz Supreme Court called Rezervspetsmet, a company affiliated with Alfa, the legitimate owner of the operator, special forces started storming Bitel’s headquarters in Bishkek. MTS President Vasily Sidorov, who came to the country on a business trip, was nearly taken hostage.
Bitel’s headquarters in Chuy prospect in Bishkek was cordoned off in the afternoon when the session of the country’s Supreme Court was underway. Policemen introduced themselves as employees of the Pervomaysky Department of the Interior of Bishkek. At 4:30 p.m., local time, when the court handed down the decision, a group of 50 special forces offices pulled up at the building. They had crow-bars, sledge-hammers and electric tools which were used during the assault of the building, as witnesses describe. “Special forces officers were well-prepared and acted in a professional way, so no one of our employees was hurt,” an employee of Bitel, who was in the building during the assault, said. “Masked people first put taped interior surveillance cameras and then forced doors of offices.”
Following an instruction of Bitel’s direction, many employees left their desks and did not put up resistance to the special forces. The cellular communication in Kyrgyzstan was disrupted ten minutes after the storm. Each side of the conflict laid the blame on its opponent. Vasily Sidorov, the president of MTS (the Russian operator became the owner of Bitel a few days ago paying $150 million) called the seizure a “half-criminal” action of Rezervspetsmet, while Rezervspetsmet accused representatives of MTS of the breakup of the communication. “Before officers of the court entered the building, people from MTS caused damage to the cellular switchboard which stripped of the communication Bitel’s subscribers, i.e. virtually all cell subscribers in Kyrgyzstan,” Oksana Kalinina, the spokesperson for Rezervspetsmet, told Kommersant yesterday. “The communication has been fully restored but we will have to carry out a large-scale job for the network to function properly.”
The cellular communication in Kyrgyzstan was restored at about 9:00 p.m., local time. By that time, Anton Fortun, first deputy general director of Bitel, and Andrey Batanov, the company’s finance director, were detained and taken to the police station.
As of late Thursday night, Moscow time, Daniyar Umurzakov, general director of Bitel, company’s managers, and Pavel Pavlovsky, MTS foreign companies relations director, were still kept at the headquarters of Bitel. The president of MTS Vasily Sidorov, who arrived in the Kyrgyz capital last morning, was in Bishkek at the time of the storm. He managed to meet Kyrgyz President Kurmanbek Bakiyev, Prime Minister Felix Kulov and Parliament speaker Omurbek Tekebaev in the wake of the incident.
“Kurmanbek Bakiyev, the prime minister and the speaker of the Parliament were perplexed by the details of the assault which I had a chance to witness and recount to the authorities,” Mr. Sidorov said. MTS President also told Kommersant that the storm as well as the decision of the Kyrgyz Supreme Court had come as an utter surprise for him. “I arrived in Bishkek on a scheduled visit and could not even imagine that the Supreme Court of Kyrgyzstan would make a totally illegitimate decision on the ownership of Bitel,” Vasily Sidorov related. “We are convinced that Bitel belongs to our company legally, and we will defend our rights for the company in international courts. The three representatives of the republic’s authority have assured me today that they will personally monitor the situation.” Mr. Smirnov also underlined that the return of $150 million paid for Bitel was out of question.
Meanwhile, Altimo, a telecommunication subsidiary of Alfa Group, came forward with an unexpected move. “The Supreme Court has put an end to the dispute over Bitel, and we are willing to buy out rights for the company from Rezervspetsmet,” Altimo stated yesterday. Rezervspetsmet, however, reported that they had not received offers from Altimo. When Kommersant correspondent asked a representative of Altimo why they had first sold Bitel to Rezervspetsmet and now were going to buy it back, the executive said that “the legal situation around the operator was precarious” at the moment of the sale of Bitel.
Experts predict the contention over the ownerships of Bitel to continue due to an evident conflict of interests between Alfa Group and Sistma, major players of the Russian telecommunication market. “I doubt that the dispute will be settled soon even though MTS has called the local supreme power to help,” Konstantin Chernyshev, the chief analyst at the Uralsib investment company, said. “The outcome of the battle is not clear now but I guess that chances of MTS are better. Yet, the risk of MTS to lose $150 million paid for the company is less than the chance of not getting it at all.”
Anton Inshutin, the director of the corporate finance department at UFG, also points out to the effectiveness of the resource of power which has so far helped MTS to resolve corporate conflicts. “When MTS buys an asset, it first stakes on the succor of the country’s authorities,” Mr. Inshutin notes. “It helped them to quickly recover a license for their subsidiary, Barash Telecom, in Turkmenistan, or to escape the deprivatization of UMC in Ukraine. But the evident interest of Alfa for the Kyrgyz company means that MTS will probably have to get down to negotiations and pay sizeable smart-money. As for international courts, MTS is also wasting efforts – it will take way too much time to retake Bitel by judicial means.”
Dmitry Zakharov; Bek Orozaliev, Bishkek
All the Article in Russian as of Dec. 16, 2005
|
