Proximus Pays Mobistar, Base $136 Million to End Pricing Suitby
Proximus SA, Belgium’s biggest telephone company, agreed to pay mobile operators Mobistar SA and Base Company NV 120 million euros ($136 million) to end 12 years of litigation about abusive pricing in the period 1999 through 2004.
Mobistar will receive 54 million euros and Base gets 66 million euros, according to a joint statement from the Brussels-based companies on Wednesday. Further terms of the settlement remain confidential. Royal KPN NV, which is in the process of selling Base to Liberty Global Plc’s Telenet Group Holding NV, said in a separate statement it will be entitled to most of the settlement proceeds for Base.
The settlement will cost state-controlled Proximus about 26 percent of its 2015 cash generation that’s available for shareholder distributions after capital spending, based on analyst projections compiled by Bloomberg. The phone company hadn’t made any provisions for potential damages, which reflected the company’s legal position that there was no wrongdoing, Chief Executive Officer Dominique Leroy said on Feb. 27.
“The lawsuit liability overhang will outweigh the cash impact,” Ruben Devos, an analyst at KBC Securities, wrote in a note to clients on Wednesday. “Recall that initially estimates of a total damage claim amounted to nearly 1.8 billion euros, whereas Proximus lost 640 million euros in market value on the day that the Brussels appeals court announced that it would further examine the market abuse.”
The settlement agreement is without any harmful recognition and translates the willingness of the parties to put an end to litigation proceedings, according to the joint statement.