GN, TDC Awarded $502 Million in Arbitration With Poland's Telekomunikacja

DPTG I/S, owned by GN Store Nord A/S and TDC A/S, was awarded about 2.9 billion kroner ($502 million) after a court said Poland’s largest phone service provider still owed the Danish companies for work they did in the early 1990s.

Telekomunikacja Polska SA didn’t correctly calculate the amount it owed for the installation of a fiber-optic transmission system, the arbitration tribunal in Vienna ruled, according to a statement published today by Ballerup, Denmark- based GN. DPTG, in which GN holds a 75 percent interest and TDC the rest, had claimed 5 billion kroner.

The total amount sought would have equaled around 11 percent of Warsaw-based TPSA’s market value and GN’s share would have equaled some 43 percent of its valuation. GN Chief Financial Officer Anders Boyer said last month the company would clarify plans for any awarded money after the ruling, as dividend and share buyback policies don’t take an award into account.

For TPSA, “any court ruling except a zero payment should be taken negatively as it will reduce the dividend payment potential,” Konrad Ksiezopolski, an analyst with Wood & Co., said in a note before the ruling, rating TPSA shares “hold.”

A call placed to the cell phone of Wojciech Jabczynski, spokesman for TPSA, wasn’t immediately returned.

Under the 1991 contract, TPSA agreed to pay 14.8 percent of profits from 15 years of traffic over the transmission system. The companies disagreed over how to measure the traffic and calculate payments.

Today’s ruling covered the period from 1994 to the middle of 2004. GN has said that DPTG is planning to make a second claim for the remaining five years of the period covered by the contract.

Award Split

Today’s award was for 2 billion kroner plus interest, which GN estimated to would be 900 million kroner, the company said. GN’s share is 2.2 billion kroner and TDC’s share is 700 million.

GN, the world’s largest maker of mobile headsets, has a market value of about 8.8 billion kroner and total assets of 7.8 billion kroner as of June 30. TPSA has a value of some 23.1 billion zloty ($7.49 billion) and assets of 29.4 billion zloty as of June 30.

The transmission line, called the North-South Link or NSL, runs from the Baltic cost of Poland southward to the Czech Republic.

Copenhagen-based TDC is Denmark’s largest phone company.

To contact the reporters on this story: Frances Schwartzkopff at fschwartzko1@bloomberg.net Crayton Harrison in Mexico City at tharrison5@bloomberg.net.

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