MOSCOW (RIA Novosti) – MTS may start bankruptcy proceedings for its Uzbekistan subsidiary Uzdunrobita, a source close to the company said on Tuesday, following a long-running legal battle with the local authorities.

“The license has not been returned to the operator [Uzdunrobita]. In these conditions, bankruptcy can be considered as a procedure that will allow the company to suspend the fulfilment of its financial obligations,” the source said.

Uzdunrobita has started to lay off its staff, local media reported on Monday, linking the move to the failure of MTS shareholders and managers to agree with the Uzbek side on its participation in Uzdunrobita. MTS did not comment on this information.

In late June 2012, the Uzbek Prosecutor General’s Office opened a criminal case against several Uzdunrobita staff, accusing them of numerous legal violations and widespread use of illegal tax evasion schemes. In July last year, the Uzbek Communications Committee suspended and then revoked all of Uzdunrobita’s licenses, citing numerous violations in the provision of services.

In September 2012, a Tashkent court ordered the seizure of Uzdunrobita’s assets, a decision later reversed on appeal.

MTS told Prime news agency in August the company believed the Uzbekistan prosecutors’ actions were intended to strip the Russian mobile firm of its business in the Central Asian state.

The case may hinder attempts by Uzbekistan to attract foreign investment, market analysts say.