MOSCOW(TelecomPaper) — Russian mobile operator MTS has started dismantling the network infrastructure of its subsidiary in Turkmenistan. The equipment may be used for MTS operations elsewhere or sold to third parties.

According to sources close to the company, the move follows the failure of MTS’s efforts to reach an amicable resolution of its dispute with Turkmenistan arising from the forced shutdown of MTS’s Turkmen operation. The source said the Turkmenistan government had “failed to engage in good faith discussions with the company”.

In July 2018 MTS announced that it had filed a request for arbitration against the Turkmenistan state with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). According to a source familiar with the matter, the government offered to re-issue the licence if MTS agreed to share 70% of its profits in the new Turkmen operation. MTS succumbed under the government’s pressure and agreed to a 20% profit share, calculated after ordinary taxes, fees and contractual payments.

During the next five years MTS invested $250 mln in Turkmenistan, building a nationwide network of 1,130 base stations. The subscriber base grew to around 2.5 mln in a country of 5 mln people.

The dismantling of MTS’s network infrastructure suggests that the company has abandoned any hope of resuming its business in Turkmenistan and seeks compensation through ICSID or an out-of-court settlement.