Dot Threatens To Cancel Jt Mobiles Licence

The department of telecommunications (DoT) has threatened to terminate the cellular licence of JT Mobiles, the cellular provider in Karnataka, Andhra Pradesh and Punjab. The department has alleged that the company has violated licence conditions and not paid three instalments of the second years licence fees.

DoT has taken this stand after rejecting JT Mobiles contention that it was within its rights to transfer 20 per cent equity to United Telecom Ltd (UTL). The ownership of the 20 per cent equity has been under dispute between R K Associates and Parasrampuria Credit and Investments Ltd (PCIL).

In a decision taken in April last year, the JT Mobiles board of directors transferred the disputed 20 per cent to UTL. When questioned by DoT on this transfer of equity, the company claimed that the 20 per cent had never been issued to either R K Associates or PCIL and, therefore, the question of violating tender conditions did not arise.

Under conditions (Clause 17) spelt out under the operating licence, on original promoter in a cellular company cannot reduce his or her stake below 10 per cent. If the promoter held less than 10 per cent at the time of incorporation of the company, then he or she would not be allowed to reduce it below this initial level.

According to DoTs interpretation, since PCIL (or RK Associates) held 20 per cent stake in JT Mobiles and so the transfer to UTL was in contravention to the licence guidelines.

The shareholding pattern filed with DoT show that Sanmar Electronics holds 20 per cent, PCIL 20 per cent, UTL 11 per cent, with Bangkok-based Jasmine Telecom, Telia AB of Sweden and Telecom Authority of Thailand collectively holding the remaining 49 per cent.

Soon after the licence agreement between DoT and JT Mobiles was signed on December 12, 1995, R K Kataria set claim to the 20 per cent equity held in the consortium by PCIL. Kataria said PCIL was, at the time of bidding, acting as a front company for him for a holding fee.

PCIL refuted Katarias contention and this was followed by litigation. RK Associates moved the Delhi High Court seeking the Parasrampuria groups termination as its nominee, while PCIL moved the Bangalore High Court. On July 11, 1997 the Delhi High Court quashed the writ petitions PCIL while the Bangalore High Court ruled against R K Associates. Both the companies have filed review petitions against the orders.

Further, in the notice sent to the company on December 31, 1997, DoT has pointed out that JT Mobiles has defaulted in timely payment of the licence fees due for the quarters 15-5-97, 15-8-97 and 15-11-97.

The department has directed JT Mobiles to pay the licence fee tranches within 30 days of receipt of the letter, failing which its licence may be terminated for failure to pay the licence fee in time and violation of Clause 17 which disallows reducing equity below 10 per cent.