SCANDINAVIAN-TURKISH FIRM MAY BUY COSCOM AND

C O N F I D E N T I A L SECTION 01 OF 02 TASHKENT 000769 SIPDIS SIPDIS DEPT FOR SCA/CEN AND EEB E.O. 12958: DECL: 04/13/2017 TAGS: EINV ECPS PGOV RU TU UZ SUBJECT: SCANDINAVIAN-TURKISH FIRM MAY BUY COSCOM AND SISTER COMPANIES IN CENTRAL ASIA REF: A. TASHKENT 516 (NOTAL) ¶B. TASHKENT 278 (NOTAL) ¶C. TASHKENT 323 (NOTAL) Classified By: AMB. JON R. PURNELL, FOR REASONS 1.4 (B, D) ¶1. (C) Summary: Scandinavian-Turkish joint venture Fintur Holdings may win the Uzbek government's approval to purchase U.S.-based MCT Corporation, the parent of telecom provider COSCOM. COSCOM's General Manager believes that Fintur has made the right approach to the Uzbeks, including lobbying President Karimov's daughter, Gulnora, who had earlier supported a Russian firm in the takeover battle. Fintur already has operations in Azerbaijan, Georgia, Moldova, and Kazakhstan. The purchase of MCT would extend its reach into Uzbekistan, Tajikistan, and Afghanistan. A takeover by Fintur would also likely end the persistent legal problems that COSCOM has had since MCT began trying to sell the firm last year. End summary. ¶2. (SBU) The Amcit General Manager of majority U.S.-owned cellular provider COSCOM told Poloff that COSCOM's parent company, Virginia-based MCT Corporation, has a potential buyer that may be acceptable to the Uzbek government. He said that Istanbul-based Fintur Holdings is interested in purchasing 100 percent of MCT. MCT, in turn, owns over 85 percent of COSCOM and significant shares of Tajikistan-based telecom firms Somoncom and Indigo, and Afghanistan-based Roshan. Fintur is a joint venture of the Swedish-Finnish firm TeliaSonera and leading Turkish mobile communications provider Turkcell. Fintur already controls telecom firms in Georgia, Azerbaijan, Kazakhstan, and Moldova. The purchase of MCT would thus complement Fintur's existing market. ¶3. (C) Since beginning talks with MCT, Fintur's Chief Executive Officer has visited Tashkent several times for talks with Uzbek officials. The company has lobbied with the office of President Karimov, the National Security Service, and the National Security Council. COSCOM's General Manager said that various government contacts have given him positive signals indicating that the government may endorse Fintur's purchase of MCT. ¶4. (C) According to COSCOM's General Manager, one notable interlocutor in Fintur's negotiations is President Karimov's elder daughter, Gulnora. Gulnora is reputed to have had a hand in the legal machinations that resulted in COSCOM's suspension in February (refs A, B). The Uzbek telecom agency's heavy-handed legal and regulatory sanctions against COSCOM in late 2006 and early this year were accompanied by repeated signals to the company from Russian telecom holding company Sistema, suggesting that COSCOM's problems would go away if MCT agreed to sell the firm to Sistema's subsidiary MTS, Russia's leading telecom firm. COSCOM officials told the Embassy that they believed Gulnora Karimova had close ties to Sistema and stood to gain personally from COSCOM's sale to MTS. Gulnora, herself, even told Poloff during an impromptu meeting that she wanted COSCOM to be sold to MTS, though she said a Scandinavian buyer would also be acceptable (ref C). Now that Fintur is negotiating to buy COSCOM and its sister companies, it has been reportedly negotiating with Gulnora indirectly, through the good offices of Bekzod Akhmedov, a director of MTS's Uzbekistan affiliate. Since negotiations with Fintur began, according to COSCOM's General Manager, the calls from Sistema have stopped. ¶5. (C) COSCOM's General Manager suggested that pressure to sell to the Russian firm had ceased, in part, because of a souring in Uzbek-Russian relations since late 2006. In addition, he said that COSCOM has been consistently repeating the message to Uzbek officials that complete Russian control over Uzbekistan's cellular communications industry would be bad for Uzbekistan's telecom market and its national security. (Note: Russian firms already control the other two leading Uzbek cellular providers. End note.) The General Manager said that this message seems now to be reaching the right people. TASHKENT 00000769 002 OF 002 ¶6. (C) Furthermore, the General Manager said that COSCOM's public battle against the national telecom agency's various legal and regulatory sanctions had apparently backfired against telecom agency chairman Abdulla Aripov. The General Manager said that, according to his sources in government, Aripov may soon be removed from his position as a result of Sistema's failure to gain control of COSCOM. The General Manager did not exclude the possibility that Gulnora Karimova and those close to her may have arranged a way to profit from Fintur's takeover of COSCOM, just as they might have profited from a takeover by Sistema. ¶7. (C) Comment: COSCOM's legal and regulatory troubles with the Uzbek government began in earnest only in mid-2006 when MCT began negotiating to sell its businesses to Qatar's national telecom firm, Q-Tel, which the Uzbek government deemed unacceptable (refs A, B). The Uzbeks' preferred buyer, Sistema, offered terms which MCT's directors could not accept. Fintur Holdings may be a compromise candidate acceptable to both MCT and the Uzbeks. If the government agrees to Fintur's purchase of MCT, it is likely that COSCOM's legal problems will promptly disappear. PURNELL