Telekomunikacja Polska Says DPTG Court Ruling Will Reduce 2010 Earnings
TPSA Says Court Ruling to Cut 2010 Profit
John Guillemin/Bloomberg
Telekomunikacja Polska didn't correctly calculate the amount it owed for the installation of a fiber-optic transmission system.
Telekomunikacja Polska didn't correctly calculate the amount it owed for the installation of a fiber-optic transmission system. Photographer: John Guillemin/Bloomberg
Telekomunikacja Polska SA said a court ruling that orders Poland’s largest phone company to pay about 2.9 billion kroner ($502 million) to DPTG I/S will have a negative impact on its earnings this year.
The France Telecom SA unit, known as TPSA, will set aside additional funds in the third quarter to account for the payment, which exceeds the current provisions by about 467 million zloty ($152.9 million), it said in a regulatory statement late yesterday. The decision won’t have any impact on the dividend and the company’s plan to generate net free cash flow of at least 2.3 billion zloty this year, it said.
TPSA didn’t correctly calculate the amount it owed for the installation of a fiber-optic transmission system, the arbitration tribunal in Vienna ruled yesterday, according to a statement published by Ballerup, Denmark-based GN Store Nord A/S. DPTG, in which GN holds a 75 percent interest and TDC A/S the rest, had claimed 5 billion kroner.
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. The 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.
Legal Steps
TPSA is analyzing legal steps to overturn the arbitration court’s ruling and will announce them as soon as possible, according to the regulatory statement. It will “correct” the level of provisions related to the case in the financial report for the first nine months of the year, it said. The Warsaw-based company is due to report earnings on Oct. 27.
Telekomunikacja’s shares dropped 0.5 percent to close at 17.1 zloty yesterday, valuing the company at 22.8 billion zloty. They have advanced 3.9 percent in the past month, the biggest gain among the stocks in Warsaw’s benchmark WIG20 Index.
To contact the reporter on this story: Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net
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