Tele Columbus - comment

United Internet (UI) potentially suing Morgan Stanley (MS) over its valuation of Tele Columbus (TC) should not distract management as they will still get the cash the MS has promised. The TC fibre rollout plan is still at an early stage, as is the challenge of transitioning clients to individual contracts. We are still sceptical about TC's plan, but acknowledge that the company has made a good start. UI is claiming €300m from MS, and it will be up to an arbitration court to decide if the claim has any value. The fallout explains why the cash injection from MS is still a shareholder loan (to Kublai), and it is likely to remain so until the arbitration process is over or abandoned. The loan is accruing at 17%, so it will quickly overwhelm any equity value in Kublai. 

https://www.mobileeurope.co.uk/united-internet-hits-pause-on-tele-columbus-investment/