December 29, 2016 / 12:16 PM / 8 months ago

Kosovo risks losing hundreds of millions in telecoms case

PRISTINA (Reuters) - A German investment company that was thwarted in an attempt to buy Kosovo Telecom in 2013 is seeking up to 400 million euros (342 million pounds) in compensation in an international arbitration court, two sources close to the matter told Reuters.

The sum of between 200 and 400 million euros represents 10-20 percent of the landlocked Balkan country's 2017 budget and would be the latest blow to the Pristina government arising from the former state-owned telecoms operator.

Kosovo's parliament blocked the planned sale of Kosovo Telecom to ACP Axos Capital Gmbh for 277 million euros in 2013.

Prime Minister Isa Mustafa's government said it would contest the claim, but declined to give details.

In a separate case last week, an international arbitration court ordered the state-owned telecoms firm to pay 29.6 million euros to local mobile telecoms service provider Z-mobile for breach of contract.

Once valued at a billion euros, Kosovo Telecom last year saw net profit drop 63 percent to 6 million euros. Trade Minister Hykmete Bajrami has said it is now a loss-making company.

Kosovo Telecom employs some 2,300 people and is the country's biggest mobile phone services provider with 54 percent market share.

Independent for only nine years, Kosovo is one of Europe's poorest countries. One-third of its workforce is unemployed.

The republic of 1.8 million people has not been able to attract foreign investment to combat poverty. Corruption, organised crime and political instability are cited by foreign companies as the main obstacles.

Reporting by Fatos Bytyci; Editing by Georgina Prodhan and Mark Potter

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