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PRISTINA, May 24 (Reuters) - State-owned Kosovo Telecom has avoided bankruptcy after a Kosovan mobile operator agreed to waive a 32 million euro ($35.78 million) fine imposed over a breach of contract, the companies said on Wednesday.
Privately owned Z-mobile won a contract in 2008 to use Kosovo Telecom's (PTK) network and technology but later took the state company to court, saying PTK did not provide it with enough SIM cards and had refused to offer 3G and 4G mobile Internet services.
In December last year, an arbitration court in London ordered PTK to pay a 32 million euro fine, putting the company, which employs 3,500 staff, on the brink of bankruptcy.
"Z-mobile agreed not to implement the arbitration court's decision which is worth 32 million euros," PTK's Chief Executive Agron Mustafa told journalists.
"We did not have this money and we had faced bankruptcy," he said.
Z-mobile confirmed that it had waived payment of the fine but did not say why.
Mustafa said PTK would pay court fees and the two companies would honour provisions in the contract signed almost a decade ago.
Once the country's most profitable state-owned company, Kosovo Telecom suffered a 63 percent drop in net profits in 2015, amid inefficiencies and rising competition from Kosovo's second-largest mobile operator is IPKO, owned by Telekom Slovenije.
The Kosovo government also may face having to pay up to 400 million euros in compensation in another arbitration court after failing to sell PTK to Germany's ACP Axos Capital Gmbh for 277 million euros in 2013. ($1 = 0.8943 euros) (Reporting by Fatos Bytyci; Editing by Aleksandar Vasovic and Susan Fenton)