Motorola agrees to settle Telsim claims

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Motorola on Friday agreed to settle its claims against the Turkish mobile carrier Telsim Mobil and the Turkish Savings and Deposit Insurance Fund (TMSF) for $500m in cash and a 20 per cent share of the proceeds from the sale of Telsim by the government if it yields more than $2.5bn.

The US mobile phone maker, which had been seeking the repayment of $2.5bn in debts it claims it is owed by Telsim, described the deal as “a positive outcome for all parties”.

The agreement follows a similar deal in August between Telsim and Nokia, the world’s largest mobile phone maker, and clears the way for Turkey to pursue the sale of Telsim and hundreds of other companies belonging to the Uzan family that the TMSF took control of over last year following the collapse of the family’s Imar Bank.

Earlier this month TMSF announced that 15 companies had applied for pre-qualification to take part in the sale of Telsim.Telsim has about 8m customers.

The Turkish government has indicated that it expected to raise at least $2.8bn from the sale, which had been held up by the legal wrangling over the company’s debts - including the $3.4bn owed to Nokia and Motorola. Talks between TMSF, Telsim and Motorola have been underway since last year.

As part of the agreement announced on Friday, Motorola has withdrawn its litigation against Telsim and its demand for arbitration against the Turkish government at the Washington-based International Center for the Settlement of Investment Disputes. Motorola also agreed not to pursue collection efforts against companies controlled by TMSF, subject to certain conditions.

However, the agreement allows Motorola to continue its efforts outside Turkey and certain other countries to enforce the previous judgment it obtained against the Uzan family for perpetrating what Motorola described as “a massive fraud against Motorola through their control of Telsim”.

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