Legal Battle Begins Over MTS Purchase

BISHKEK / MOSCOW -- A little-known company linked to Russia's Alfa Group is the owner of Kyrgyzstan's Bitel, a court ruled on Wednesday, raising the prospect of a tough legal fight for the top Kyrgyz mobile firm.

The ruling came two days after Alfa's Russian rival Mobile TeleSystems announced it had bought Bitel, and a senior MTS official said after Wednesday's ruling that his firm would take its claim to international courts.

Alfa Group is a top shareholder in VimpelCom, the country's No. 2 mobile phone firm, after MTS. A court in the Kyrgyz capital, Bishkek, confirmed an October ruling by the Justice Ministry that Rezervspetsmet, which is linked to Alfa, had ownership rights over Bitel.

"Today, Rezervspetsmet is the only company, which has proven its ownership rights over Bitel," Rezervspetsmet spokesman Ulugbek Sadyrov told reporters after the court ruling.

MTS said on Monday that it had taken over Bitel from Kazakhstan's Alliance Capital in a deal worth $150 million, but the latest court ruling said the seller had no rights over the asset.

The ruling overturned one by a Kyrgyz court in October that said Alliance -- linked to ousted Kyrgyz President Askar Akayev's family -- owned Bitel, only GSM-standard Kyrgyz operator.

"We have a legal problem and we are ready to tackle it," Pavel Pavlovsky, an MTS official, said at a news conference in Bishkek.

"We have chances for success in the legal [playing field]," Pavlovsky said, adding that MTS chief executive officer Vasily Sidorov was due to arrive in the Kyrgyz capital on Thursday.

Pavlovsky said MTS was ready to prove its ownership rights over Bitel in international courts. "There is nothing terrible about it, it should not cast a shadow on our image."