Long standing litigation over what Telekomunikacja Polska (TPSA) owes to Danish Polish Telecommunications Group (DPTG) for data traffic volumes over NSL fiber-optic transmission system installed 20 years ago in Poland was finally settled. Previously it had been ruled that TPSA had improperly calculated how to measure the traffic volumes over the network and thus what DPTG was owed. That ruling was pertaining to phase 1 of the dispute over a period of 1994-2004. DPTG had initiated enforcement action to try to receive the cash compensation where as TPSA was complaining over the ruling.
This settlement now reached calls for TPSA to pay DPTG a total of 550 million Euros in order to resolve the dispute once and for all, also including the second phase of the litigation involving the 2004-2009 period. Half of the cash has already been received by DPTG and the other half is in an escrow account and will be released upon the termination of ongoing enforcement proceedings.
Danish GN Store Nord A/S (OMX: GN) owns 75% of DPTG and is thus entitled to receive around 3.1 billion DKK. TDC A/S (OMX: TDC) owns the remaining 25%. GN Store Nord’s portion of the initial amount awarded to DPTG in a 2010 ruling from Arbitration Tribunal in Vienna for phase 1 was around 2.2 billion (including interest payments). GN’s share from DPTG’s claim against TPSA regarding Phase two was nearly 2 billion, where as initial estimates by GN concerning what TPSA might owe to it for 2004 to 2009 contract period had been in over 1 billion range.
Despite the final settlement falling somewhat behind highest estimates, for the matter to be finally closed was viewed as a major positive for GN and it seems markets weren’t terribly disappointed about the amount to be received either. TPSA had earlier set aside a provision of nearly the entire amount now agreed upon. GN said in the aftermath of the deal that it is initiating a 1.3 billion DKK share buyback program and its stock reacted positively to the news.
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