UPDATE 2-Turkcell ordered to pay Turk Telekom 279 mln lira

ISTANBUL, 5 Nov (Reuters) - Fixed line operator Turk Telekom said on Thursday a court ruled its mobile competitor Turkcell must pay it 279 million lira ($187 million) in a dispute over interconnection rates. Turkcell, the market leader in Turkey which competes with Turk Telekom's mobile phone firm Avea in the domestic market, said it would appeal the ruling. "Turkcell is required to pay Turk Telekom an amount of 279 million lira to recover our company's losses due to the international connection established by Turkcell via Millenicom GmbH," Telekom said in a statement, adding the ruling was made by the Ankara Commercial Court on Thursday. Turkey's mobile-phone market, which has some of the highest penetration rates in Europe, is highly competitive, and new regulation to liberalise it has sparked an unprecedented price war, amid deep economic recession in the country which has seen people curb phone usage sharply. Mobile operators are also involved in multiple law suits, with each other and regulators, over connection rates and fees. "The court's ruling is unjust and contrary to law and (legal) procedure.

On the basis of our belief that we are in the right and our view that the ruling is unlawful, once we are officially notified of the court ruling we will launch an appeal," Turkcell said in a statement. Shares in Turkcell fell 2.91 percent in afternoon trade after the statement, having ended the morning session flat. Turk Telekom shares were up 0.9 percent, having dipped 0.43 percent in the morning session. Last month Turkcell said Turkish tax authorities demanded it provide collateral to meet a 258.3 million lira fine for value-added tax and special communications tax on roaming calls. Analysts at Tera Brokers, who rate Turkcell "neutral", said assuming Turkcell provisioned for both the tax collateral and the Turk Telecom charge it could wipe off around 85 percent of estimated fourth-quarter profit. But they added: "We do not change our price target since these one-off charges are not significant enough to have a large impact on our model." Turkcell posted net profit of $245.8 million in the second quarter, a decline of 42 percent on the previous year. It was due to publish its third-quarter results on Wednesday but postponed them until November 12. (Reporting by Alexandra Hudson and Daren Butler) Keywords: TURKTELEKOM TURKCELL ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.