TK ends controversial Z Mobile contract after six months of talks

31 Jul 2019

State-owned full-service provide Telecom Kosovo (TK) has allowed its host network agreement with Dardafon – which offers wireless services under the Z Mobile brand – to expire after the two failed to agree on terms for the renewal of the controversial contract. Explaining the decision, CEO Bedri Istrefi was cited by Ekonomia Sot as saying that Z Mobile had only agreed with three of the 20 proposals put forward by TK and had not submitted any suggestions of its own during the six-month long negotiations. As such, TK’s board chose to terminate its relationship with the reseller. The official went on to assure customers of the MVNO that they would not be left without service and that it was working closely with the regulator to coordinate a transition period of 30 to 120 days. Separately, the Gazeta Express quoted Minister of Economic Development Valdrin Lluka as saying that the Z Mobile subscribers would be gradually migrated to TK.

As noted by TeleGeography’s GlobalComms Database, TK’s initial 2009 contract with Z Mobile has been the subject of a great deal of controversy. Most recently, the agreement has been blamed for TK’s financial difficulties, with the telco’s union going as far as calling a general strike this week in an effort to prevent the renewal of the contract. Z Mobile was also awarded EUR32 million (USD35.7 million) in damages and costs by an international arbitration court in December 2016 after complaining that TK was not abiding by the terms of the initial contract. Dardafon’s owner was reported to have waived most of the penalty in order to prevent TK from going bankrupt, but in early 2019 the MVNO began threatening legal action if TK did not repay the roughly EUR26 million it said it was still due. The MVNO explained that it had not waived the fee and had simply expressed its willingness to work with TK on a mutually acceptable payment plan. The penalty looms over the company, with company officials having stated on several occasions that it cannot afford to pay the fee and the government refusing to bail out the telco. Muddying the waters, the situation has become politically charged, with opposition groups accusing the government of corruption and colluding with Dardafon’s owner, Blerim Devolli – a businessman reported to have ties to the administration – to devalue TK in preparation for its privatisation.