MTS worker. Photo by peretzp, 2010.
The exile news site gundogar.org is reporting that MTS is returning to Turkmenistan, citing the Russian business daily Kommersant.
The Russian mobile company was unceremoniously turfed out of Turkmenistan back in 2010, when relations with Russia were souring in general, following the April 2009 pipeline explosion and the sharp reduction in Gazprom's purchases from Ashgabat.
The Turkmen Ministry of Communications refused to renew a 5-year lease that lapsed in 2009, and then abruptly shut off the service in December 2010. MTS scrambled to negotiate a renewal and then to litigate and then to negotiate, even asking the US to intervene at one point, officials say privately. The US said it doesn't get involved in overseas commercial disputes, however.
But this was way more than a commercial dispute -- this was cutting of 2.4 million subscribers to a vital service that they needed for everyday life, health, education, travel -- and of course news. Not all the phones had the capacity to reach the Internet, but some did, and with the galloping increases in the customer base, MTS was adding 4G capacity and it would have been readily used, and not just by ex-pats. Turkmens are geniuses at rigging up satellite TV to watch Russian, Turkish and other cable TV, even as their wily president keeps ordering them to be taking down, ostensibly because they are "eyesores". They would have grabbed at the phones like hotcakes.
MTS is saying it may return in a few months, after losing between $594 million to $1.3 billion dollars -- for which it is tied up in court, litigating. I understand the cell towers and stores and everything related to the company were confiscated or made difficult to access -- it's not just the customer lists they're talking about.
Ashgabat unabashedly went about courting Nokia Siemens and Huawaei, the Chinese mobile company, and talked about bringing several competing cell phone companies into being to compete with the antequated and slow state system, named Galkynysh, like every other damn thing in Turkmenistan. (The word means "renewal," and that was the official campaign name of Berdymukhamedov's first term.)
This news isn't exactly straightforward.
Vladimir Yevtushenkov, chairman of the board of Sistema AFK, the company that controls MTS, announced that MTS would return to Turkmenistan in 3-6 months, according to an AFP report, and an agreement was reached with President Berdymukhamedov.
But this is an old story, where Russians announce things they think they have gotten from Turkmens, in part to try to seal the deal and/or pressure the Turkmens into sealing the deal. It sometimes backfires. All Berdymukhamedov did was note "the broad opportunities for developing mutually profitable cooperation," according to the State News Agency of Turkmenistan, but Yevtushenko is the one saying there were "concrete proposals."
My bet is that Berdymukhamedov cut off the Russian cell phone not merely because he was trying to stick it to all things Russian -- Ashgabat is careful to deal with some Russian entities and not others, usually outside Moscow, to get things like tanks and trucks. And the Turkmen dictator is going to Moscow next week apparently to discuss the Customs Union which Putin is trying to put together -- which Turkmenistan will not likely join.
No, I think he cut off cell service to prevent MTS from going further with Internet connections that would soon bring the Arab Spring -- and perhaps more of relevance -- the Russian protests against Putin -- to the screens of Turkmens. Turkmenistan lives in an incredible information blockade and closed, Soviet-style society, but still people manage to get news here and there and did a remarkable job as well getting news out, when the explosion in the arms depot happened last July. Obviously, the Turkmen government wants to keep that under control.
A more mundane reason for the break-up was always given by Kommersant and other papers: Turkmenistan demanded a higher percentage of the deal than just 50 percent. With rapid growth and half the population having the service, the Turkmens wanted more out of it for themselves.
What could have changed about all this? Well, the Arab Spring isn't turning out to be so democratic, bringing hardline Islamists to power, and is less attractive than it was. Putin is crushing the street protests and is back in power. So the threat isn't so great. Meanwhile, doing without cell phones is a huge pain, as people just can't get work done or take care of their families. The public protest about this reached such proportions last year that the riot police had to be called in to control a line of customers waiting to try to get refunds or switches to the state service -- and that is very rare in Turkmenistan.
Putin may also realize that he can hardly expect Turkmenistan to join the union if it doesn't even allow a Russian cell phone company active in all the other former Soviet nations to do business -- it just doesn't look like Turkmenistan is part of the modern world, and he is likely letting Berdymukhamedov know that. For his part, the Turkmen president may find it beneficial to deal with Russia rather than Finland and China on phone business -- in part having the deal with Russia offsets his dependency on China for the pipeline. It's diversifying business away from oil and gas and joining the modern age of aps and such. But he wants the piece to be bigger, and Russia may be willing to let it be bigger, given their past losses in Turkmenistan.