Thursday, October 27, 2005

Motorola Settles Telsim Issue for $500 Million

Motorola has reached an agreement to settle financial and legal claims against Turkish cellular phone operator Telsim Mobil Telekomunikasyon (Telsim), and the Turkish Savings and Deposit Insurance Fund (TMSF).

Motorola has settled its claims for a cash payment of $500 million which the company received today plus the right to receive 20% of the proceeds from the sale of Telsim assets over $2.5 billion. Motorola has further agreed to dismiss its litigation against Telsim as well as Motorola's pending demand for arbitration against the Government of Turkey at the International Center for the Settlement of Investment Disputes (ICSID) in Washington, D.C. In addition, Motorola has agreed not to pursue collection efforts against certain corporate defendants under TMSF control, subject to certain conditions.

The agreement permits Motorola to continue its efforts, except in Turkey and certain other agreed upon countries, to enforce its previous judgment rendered on behalf of Motorola against the Uzan family for perpetrating a massive fraud against Motorola through their control of Telsim.

  • In August 2005, to collect the international roaming and interconnect revenues of Telsim Mobil Telekomunikasyon (Telsim), the second largest mobile operator in Turkey, as a means of enforcing its approximately $2.5 billion arbitration claim against the company.

  • On June 13, 2005, a panel of arbitrators from the Zurich Chamber of Commerce issued a final award (“the Final Award�?) in the arbitration pending between Telsim and Motorola Credit Corporation (“MCC�?) concerning the amounts due by Telsim to MCC under the financing arrangements between the parties. Telsim had borrowed nearly $2.0 billion from Motorola for the financing of a Motorola-constructed cellular telephone system and has failed to pay Motorola despite the system's operational success. Telsim had refused to pay Motorola.