May 21, 2018 10:15 AM, EDT

Daimler, Deutsche Telekom Settle Toll-Collection Dispute

Krisztian Bocsi/Bloomberg News

Daimler AG and Deutsche Telekom AG agreed to a 3.2 billion-euro ($3.8 billion) deal with the German government, ending a spat over the clunky start of a system to collect truck tolls that had become one of the country’s longest-running legal disputes.

The agreement involves a cash payment of 1.1 billion euros, which will be split evenly between Daimler and Deutsche Telekom, Germany’s Transport Ministry said May 16.

Daimler, the Stuttgart-based maker of Mercedes-Benz cars and trucks, said the deal will lead to a one-time charge of about 600 million euros in the current quarter.

“It’s very good that this issue is now off the table after 14 years,” Nord A/B analyst Frank Schwope said by phone. “The settlement sounds relatively acceptable.”

The dispute dates to 2004, when Daimler and Deutsche Telekom struggled to start collecting tolls with a system that automatically calculated fees using GPS tracking, prompting the government to start arbitration. The case ultimately stalled several times.

New Tender

The two companies, which currently hold 45% of Toll Collect GmbH, will withdraw from the operator at the end of August, when the current contract ends. The German government will then assume control of Toll Collect until a new operator is awarded by March. Daimler said it doesn’t plan to bid in the new tender.

The automaker warned that profit at its financial services division, which manages its Toll Collect activities, will be held back to last year’s level as a result of the settlement.

Daimler still expects 2018 group results to be slightly higher.

Deutsche Telekom said the cash payment won’t impact earnings or cash flow expectations, Andreas Leigers, a spokesman for the Bonn-based phone carrier, said by phone.