ECONOMY

Deal on settling Telsim’s dues expected soon

ISTANBUL – Turkey’s Savings and Deposits Insurance Fund (TMSF) is expected to reach a deal soon on paying part of Turkish mobile phone company Telsim’s $3.2 billion debts to Motorola and Nokia, a source close to the negotiations said. TMSF took over Telsim and hundreds of other firms belonging to the Uzan family after the collapse of the family’s Imar Bank, and says the Uzans owe the fund nearly $6 billion. Family patriarch Kemal Uzan and his son Hakan are on trial in absentia for fraud in connection with the bank. Finland’s Nokia, the world’s biggest mobile phone maker, and Motorola, the second largest, sued the Uzans in 2002 for about $3 billion, charging them with misappropriating loans to Telsim. The vendor finance loans date back to 1998. At that time, large telecommunications equipment providers frequently lent money to customers to help them buy their products. The source close to the talks between TSMF and Motorola told Reuters that finalization of a debt payment deal would not be possible before passage of a bill empowering TMSF to sell the companies and assets it has seized. Under the bill, TMSF will be able to sell the companies it seized from the Uzan family in auctions and overcome objections from the family. Parliament is expected to pass the bill next month. TMSF could either pay nearly $400 million to Motorola or 20 percent of the revenue expected to be generated from the sale of Telsim, whichever is the greater, the same source said, adding that Nokia could receive $250 million. In 2002, Motorola wrote off the $2 billion loan it made to Telsim. Nokia has written off its loans of $700 million. Sell-off planned The chairman of TMSF has said the body is planning to sell Telsim in the first two months of 2005, and leading global GSM service providers have shown strong interest in buying it. The chairman declined to name these companies, but said manufacturer Motorola was not one of them. Mobile phone sector specialists said Telsim had recovered some of its losses after TMSF seized it and had reinforced its position as the second-largest operator in the fast-growing Turkish market with new investments and advertisements. Some financial experts estimate the company’s market capitalization at $4 billion. Motorola and Nokia hold a 22 percent and a 7 percent Telsim stake respectively as collateral. «What is more important is that Turkey’s credibility in the eyes of international investors will be cleared of this stain,» said the source.