Vimpelcom says Uzbek unit faces tax investigation

Reuters

(Corrects second para to show court ruling against MTS lastyear not a month ago)

MOSCOW, Oct 15 (Reuters) - Uzbekistan's tax authorities havelaunched an investigation into Vimpelcom's mobile unit,Unitel, the telecoms group said on Tuesday, a move described byanalysts as highlighting the risks of doing business in thecentral Asian state.

The investigation of Unitel began just over a year after aTashkent court ordered the confiscation of all assets owned bythe Uzbek subsidiary of top Russian mobile operator MTS in a criminal case against its local staff.

Vimpelcom is unaware of the reasons behind the probe, aspokeswoman said, adding that the company has provided theauthorities with all the documents they requested.

"The initiation of an unscheduled tax inspection highlightsthe risks of doing business in Central Asia, particularly inlight of MTS's experience last year," Uralsib analysts said,adding that the impact on Vimpelcom's cash flows would belimited given the unit's small share in the group's business.

MTS last year took a $1.1 billion write-off after an Uzbekcourt revoked its local operating licence in a case that MTScalled a "classic shakedown" of foreign investors.

It has been contesting Uzbek court rulings at the WorldBank's International Centre for Settlement of InvestmentDisputes since November last year.

Vimpelcom has 10.2 million subscribers in central Asia'smost populous country, out of 215 million in total acrossRussia, Italy and various emerging markets. The unit accountsfor around 3 percent of Vimpelcom's consolidated revenues.

Uzbekistan's state tax committee was not immediatelyavailable for comment. (Reporting by Maria Kiselyova in Moscow, editing by PatrickLannin)

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