Cesky Telecom - Cesky Mobil suit Eurotel for CZK 1.04bn

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Investiční bankovnictví KB

      Cesky Mobil, the youngest mobile operator announced it suited the other mobile operators Eurotel and T-Mobile CR for CZK 1.6bn for damages caused the company by charging its customers higher call rates for calls to Cesky Mobil’s network compared to their own networks. Cesky Mobil claims that it had a negative impact on subscribers’ additions. Cesky Mobil suits Eurotel for CZK 1.04bn and T-Mobile CR for CZK 615m. Eurotel and T-Mobile CR were fined CZK 48m and CZK 15m respectively by the Antimonopoly Office for this issue.

       The lawsuit could potentially have negative impact on financial results of Eurotel and Cesky Telecom (Cesky Telecom owns 100% of Eurotel) of CZK 1bn. Eurotel would have to create provision against the potential liability, which would have negative impact on Cesky Telecom’s financials. However, it would have negative impact on the company’s cash flow only when it is paid. The size of the provision would depend on assessment of Eurotel’s chances to prevent itself against the lawsuit. The final size of the potential payment would depend on court decision, which could confirm Cesky Mobil’s claims, decide to reduce it or decide in favor of Eurotel.

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