The controversy over a department of telecommunications (DoT) decision allowing equity changes in JT Mobiles, the cellular licensee in Andhra Pradesh, Karnataka and Punjab, and transfer of the Punjab cellular licence to another legal entity has taken a new twist with the ousted partner, Parasrampuria Credit and Investments Ltd (PCIL), challenging the move in the Delhi High Court.
PCIL, which held 20 per cent equity for RK Associates in JT Mobiles, has taken recourse to the courts as a last-ditch measure to stop the equity changes in the cellular company. The ownership of the 20 per cent equity stake is under contention between PCIL and RK Associates. The case is expected to come up for hearing in the Delhi High Court next month.
On March 10, despite advice from its own staff, DoT had granted JT Mobiles an "ex post facto approval" to increase the equity holding of United Telecom Ltd (UTL) from 11 per cent to 31 per cent in JT Mobiles. The Rajamohan Rao-promoted UTL had increased its equity by buying out the 20 per cent disputed equity from RK Associates.
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This is in contravention to the licence conditions for cellular service providers, which stipulate that original equity partners in a company hold a minimum 10 per cent stake in it for a lock-in period of three years. DoT reversed its stance on the issue while granting JT Mobiles to effect an equity change.
Also, JT Mobiles was allowed to transfer the Punjab cellular licence to Evergrowth Telecom Ltd (EGTL), its wholly owned subsidiary. Ruias-owned Essar Telecom has a management contract to run the operations in Punjab under the `Essar Cellphone' and is expected to take over the company since it has advanced Rs 98 crore in the form of convertible debentures to EGTL.
On January 27, disregarding recommendations of a committee set up to look into the JT Mobiles' case, DoT allowed the company's promoters to transfer the disputed 20 per cent equity to UTL. The committee had rejected the contention of JT Mobiles that it did not violate any tender conditions by transferring 20 per cent equity held by RK Associates to UTL in April 1997.
JT Mobiles is a joint venture between Sanmar Electronics with 20 per cent equity, PCIL or RK Associates with the disputed 20 per cent, UTL with 11 per cent, Telia AB of Sweden with 26 per cent, Bangkok-based Jasmine Telecom with 13 per cent and Telecom Authority of Thailand with 10 per cent.
However, a final transfer of equity in JT Mobiles has not been effected because the company has not fulfilled certain conditions laid down by DoT. The company is to pay as much as Rs 540 crore in licence fees to the Union government. It was to pay most of this by May 30, which it has failed to do.