Invest-in-Serbia: Private FDI Information, Strategic communication and Consulting Service for SEE, Custom Analysis and Reports - Serbia Pulls Mobtel License-Questions Risky Contract in Kosovo

BELGRADE, Serbia-Montenegro-The Serbian government on Thursday stripped the country's largest mobile phone operator, Mobtel, of its license because of an allegedly clandestine deal with a Kosovo company run by an ethnic Albanian.

Mobtel, established by controversial Serbian billionaire Bogoljub Karic, violated regulations and also "jeopardized national security" by selling part of the license that applies to providing services in Kosovo, the southern province run by United Nations and NATO since the Kosovo war, the government said.

"We have revoked the license given in 1998 because Mobtel was obliged to ask for our permission to sell, partially sell or transfer any part of the license to a third party," Economy Minister Predrag Bubalo said.

The "sublicensing," was made in December 2003 to Mobikos, a Kosovo-based company run by local businessman Ekrem Luka, "a renowned lobbyist for an independent Kosovo," said Bubalo, adding that the government "was not even notified about the deal."

Interior Minister Dragan Jocic stressed that introducing Mobikos into Mobtel's network could enable "any number of unauthorized persons" to tap into mobile phone conversations in the southern region. He did not specify if such wiretapping took place.

Financial issues also played a part in the government's decision to revoke the license, officials acknowledged.

"One of the worst (Kosovo) Albanian extremists, Ekrem Luka, is using (Serbia's) state resources and the profits to further his campaign for an independent Kosovo. We cannot tolerate that," said Velimir Ilic, Serbia's minister for privatization.

Mobtel kept details of its deal with Mobikos a secret for two years, Serbian officials said, adding that the government obtained a copy of the contract only recently, from U.N. officials in Kosovo following a related investigation in the southern province.

Under the arrangement, 30 percent of net profits made in Kosovo went to Mobtel and 70 percent to Mobikos.

Karic's lawyer, Zdenko Tomanovic, said there were no legal grounds to revoke the license "because Mobtel never transferred any part of the license. It merely made a contract on technical cooperation" with Mobikos, he said.

Serbia's 1998 military campaign against Kosovo's ethnic Albanian separatists was halted by NATO bombing in 1999. The province has since been a protectorate but talks on its final status are expected next year.

Mobtel was originally co-founded by Karic and Serbia's state-run PTT telephone company. The partners, however, are also locked in a separate dispute over who owns the majority share in the company.

That issue is to be resolved before an international court in Switzerland and its outcome will also help resolve Karic's decision earlier this year to sell his stake to an Austrian consortium, the Schlaff Group.

The tangled web of conflicting interests became even more complicated after Karic actively entered politics in 2003. He founded a political party whose increasing popularity has threatened the stability of the Cabinet led by Prime Minister Vojislav Kostunica.

Meanwhile, the government pledged that the mobile network and its users will not be affected.

"Mobtel will continue to provide its service," Bubalo said. "Until further notice, the company will be administered by Telekom", a rival mobile phone provider which is also co-owned by the state.

Source: Serbianna

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