WASHINGTON, December 16 /PRNewswire/ --

The Tbilisi City Court has rejected a legal motion brought by the Russian mobile telephone carrier Megafon seeking the dismissal of a fine imposed on the company by regulatory authorities for illegal unlicensed operations in South Ossetia and other areas of Georgia's sovereign territory. The court's decision is the latest in a series of judgments confirming Megafon's activities in Georgia, which regulators say dates back to 2005.

Megafon's ongoing unlicensed presence in Georgia, which is akin to an economic occupation and annexation, is unacceptable and should not be tolerated by its European ownership, said Giorgi Arveladze, chairman of the Georgia National Communications Commission, in reference to the publicly traded Swedish company Teliasonera, which holds a 43.8% stake in the Russian company. This illegal seizure of the radiospectrum, which played a significant role in the August invasion of Georgia by the Russian military, poses a serious international legal problem that we are determined to address.

The case of Megafon's unlicensed coverage in Georgia has received significant attention in the international media, and was referenced in a recent speech at the Washington DC-based Hudson Institute by former economic adviser to the Kremlin, Andrei Illarionov. In discussing the early preparations made by Russia in the lead-up to the war, Mr. Illarionov established that Megafon is known to have provided secure communications for the Russian military before and during the conflict, and that company owner Leonid Reiman has benefitted from close connections with Moscow.

Previously, Megafon only covered part of the former Autonomous Republic of South Ossetia, namely, Tskhinvali and Java regions. In August of 2008, during the Russian intervention on Georgian territory, the company expanded the coverage area and exceeded the conflict zone to include the regions of Gori and Kareli. A report issued by the GNCC on August 23 details this unauthorized use of radiofrequencies. As a result of these illegal activities, Megafon caused technical problems to Magticom and Geocell, both licensed companies operating in Georgia.

Following the latest court ruling, Megafon is obligated to terminate operations and pay a fine exceeding US$350,000.00.

It is the duty of this Commission to enforce compliance with the law by all telecom operators active within Georgia's national sovereign territory, and it is clear from our surveys that Megafon has blatantly disregarded regulations and violated the law, said Mr. Arveladze. We view it as a positive step that the company has recognized Georgia's jurisdiction over this matter, and it is our hope that the company's European ownership will act swiftly correct the situation.

All documents relating to Megafon's unauthorized activities, documented since June 2008, have been sent to the Prosecutor General's office. The Georgian National Communications Commission will exercise its legal rights in order to terminate this infringement.

James Kimer for Georgian National Communications Commission, +1-917-355-0717, James.kimer@ksocialmedia.com