November 20, 2018 / 2:26 PM / 5 months ago

Shares in Russia's MTS hit three-month low on possible $850 million liability

MOSCOW (Reuters) - Shares in Russia’s MTS (MTSS.MM) fell sharply on Tuesday after the mobile phone operator declared it had set aside 55.8 billion roubles ($850 million) to cover the possible fallout from a U.S. investigation into its operations in Uzbekistan.

MTS exited the Uzbek market in 2016 after coming under scrutiny from the U.S. Department of Justice and the Securities and Exchange Commission as part of a broader investigation into telecom firms’ operations in Uzbekistan.

MTS reported on Tuesday third-quarter net losses of 37 billion roubles, compared with a net profit of 18 billion last year, after docking a liability of 55.8 billion roubles from its financial statement to cover the outcome of the investigation.

“We got a clearer understanding of the possible size of the possible liabilities and we were able to make the corresponding assessment,” Alexei Kornya, the firm’s president, was quoted by Interfax news agency as saying.

As of 1351 GMT, shares in MTS were down 6.3 percent in Moscow, their lowest level since Aug. 24.

“MTS continues to cooperate with the U.S. authorities in the ongoing investigation,” the firm said in its quarterly disclosure.

“There can be no assurance as to the form, timing or terms of any resolution to the investigation.”

The mobile phone operator would have reported net profit of 18.7 billion roubles had it not set aside the possible liability, the firm said.

Reporting by Tom Balmforth, Maria Kolomychenko and Polina Devitt; editing by Louise Heavens

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