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The Government of the Republic of Serbia

In the service of citizens

PTT Srbija becomes Mobtel's biggest creditor

Belgrade, 12 January 2006

The Serbian government approved at its session today a decision reached by the managing board of the state telecommunication and postal company PTT Srbija on taking over accounts receivable worth €91.3 million from two Austrian banks – Reiffeisen Bank (€19.7 million) and Hypo Alpe-Adria Bank International (€71.6 million). In this way, PTT Srbija becomes the biggest creditor of the mobile telephone operator Mobtel.

PTT Srbija becomes Mobtel's biggest creditor

By taking over accounts receivable, PTT Srbija also becomes entitled to all incidental rights envisaged in loan contracts, including security rights over all movable assets of Mobtel, tripling the value of loans.

In this way, PTT Srbija automatically becomes the largest creditor of the company Mobtel "Srbija" BK-PTT Beograd, which is a matter of prime importance for the state. The new contract also envisages that the Republic of Serbia can transform its accounts receivable into share capital in the company Mobtel "Srbija" BK-PTT Beograd and in that way considerably increase majority share in the company's capital.

The terms of the loans are extremely favourable, envisaging a three-year grace period and repayment period until 2021, with the annual interest rate of 4.3%.

The Serbian government also adopted the Information on accelerating the process of issuing licence to a new mobile telephone operator and delegated this activity to the Serbian Ministry of Capital Investment.

In line with the contract the government will cover the expenses of taking over accounts receivable from the two banks by means of funds acquired in the privatisation process. The sum paid will be covered through the sale of an operating licence to a new mobile phone operator in Serbia.