TeliaSonera comments on developments in Uzbekistan

In Uzbekistan, TeliaSonera has since 2007 owned the company Ucell, an important part of our operations. In 2007 TeliaSonera acquired a small operator with little less than half a million subscribers and has since developed its operations, enabling daily communication for over nine million subscribers. TeliaSonera employs 800 persons, is one of the largest tax payers in the country and continues to invest in expanding the infrastructure. TeliaSonera has thus contributed to growing mobile penetration in Uzbekistan from 19 to 90 percent since its establishment in the country.

In conjunction with the purchase of the company, TeliaSonera entered into an agreement with Takilant Limited, to acquire a 3G license, frequencies and number series, in exchange for a compensation of 30 million USD and a 26 percent ownership in Ucell. The acquisition of these assets was a prerequisite for establishing itself in the country and carrying out telecom operations.

At the time of acquisition, a background check on Takilant Limited was carried out, to ensure the company had all necessary permits and was the owner of the assets to be purchased. It was also ascertained that the persons representing the company had the mandate to do so. TeliaSonera has no insights into how Takilant has used the proceeds, or whether there are any connections to other persons in Uzbekistan.

In conjunction with the shareholders’ meeting on August 23, TeliaSonera stated that the company would continually assess if the commercial and sustainability related conditions motivates a continued presence in a country. The financial potential, and how TeliaSonera, through its presence, can positively contribute to a country’s developments are important factors. Mobile telephony is a tremendous force for increased openness and development. TeliaSonera also assesses a country’s legal structure, corruption incidences, working conditions, environmental impact and whether its presence contributes to the violation of human rights in an unacceptable way.

- We are concerned about the recent developments related to the business climate in Uzbekistan. A few months ago, the largest operator in the country, MTS lost its license, and on September 17 the company’s assets were seized by the Uzbek government. It is one of the worst things which can happen to a telecoms operator, therefore we are closely monitoring the situation says Cecilia Edström, Head of Group Communications at TeliaSonera.

TeliaSonera, will after the airing of the Uppdrag Gransning program, comment on its content during Thursday, September 20.

Important information on Ucell owner structure:

In conjunction with the acquisition of the assets of Takilant a put option was issued, giving Takilant the rights to carry over its ownership in Ucell to TeliaSonera at the end of 2009, at a pre agreed price. In February 2010 Takilant exercised part of its put options and TeliaSonera increased its ownership in the company from 74 percent to 94 percent, for a sum of approximately 1550 million SEK.