Turkey's Telsim, Shunned By Nokia, Turns to Alcatel (Update2)
By Yalman Onaran
Istanbul, July 9 (Bloomberg) -- Telsim Mobil Telekomunikasyon Hizmetleri AS, Turkey's No. 2 mobile phone operator, said it has turned to Alcatel SA as its new supplier after failing to pay about $1 billion it owes to others.
Telsim said in a statement it signed an initial $30 million agreement with the French equipment maker. Alcatel spokesman Klaus Wustrack would only say that the companies are ``in discussions.''
Nokia Oyj, the world's leading maker of mobile phones, stopped supplying equipment to Telsim last week after the Turkish phone company failed to repay $240 million in financing and said it will submit the issue for arbitration.
Motorola Inc. has also said it may take unspecified actions to recover the $728 million payment Telsim has missed on a $2 billion financing package. Motorola's collateral for the loan to Telsim is to receive or sell 66 percent of Telsim's stock, according to a May filing with the U.S. Securities and Exchange commission.
Telsim, weathering Turkey's recession following a 45 percent devaluation of the currency, blamed Motorola for the switch to Alcatel.
``Until now, Motorola has been the main supplier of'' Telsim's network, the company said. ``Telsim has found out that Alcatel equipment is more cost effective'' and free of technical defects, it said.
Shares of European phone equipment makers are the third-worst performers on the Bloomberg European 500 index over the past five days, having fallen 14 percent amid concern that sales will slow as phone companies focus on paying off debt accrued in bidding for new licenses rather than expanding their networks.
Shares in Alcatel rose 32 cents, or 1.67 percent to 19.45 euros. They have fallen 68 percent so far this year, compared to a 40 percent decline in the SBF Capital Equipment Index.
In an effort to win new orders, equipment makers like Nokia, Motorola and Ericsson AB have extended financing packages to their clients.
Nokia had guaranteed a total of $719 million in loans to help Telsim build part of its network with Nokia equipment. Telsim said it will replace 360 base stations in the Ankara region, the nation's capital, with Alcatel equipment. It didn't say which company's stations will be removed.
Alcatel has already been burned once this year from contracts not being fulfilled. In May 360networks Inc. indefinitely suspended its plans to build a south Asian network and a trans- Pacific cable, including a $1.1 billion contract with Alcatel. Alcatel, which was the main supplier of network equipment on the trans-Pacific cable, said at the time that the delay would ``substantially impact'' its submarine business. |
