Ameritech hints of legal action over GSM

"Ameritech is prepared to stand up and take all necessary steps to defend its rights," said Herbert Hribar, vice president of operations for Ameritech International. Hribar affirmed that could include legal actions, although he declined to say against whom.
The shareholders in Centertel, which operates a more limited Nordic Mobile Telecommunication system, are France Telecom (24.5%), Ameritech (24.5%) and Telekomunikacja Polska SA (51%).
The point of contention is a letter of intent issued in 1991 by then Communications Minister Jerzy Slezak which said that Centertel would be granted a GSM license as soon as the 900 MHz frequency (then used by the military) became available.
Not so. Once the frequency became available, Centertel applied for a GSM license. The ministry's response - if you want a license, you'll have to bid for it in a competitive tender. Unofficial estimates for a license are running $100 million to $300 million.
The Communications Ministry justifies the decision, saying, for one, that a letter of intent does not represent a contractual obligation and, second, that changes introduced in July to the Telecommunications Act require that all licenses be issued through a public tender.
The decision prompted protest letters from U.S. and French ambassadors, urging the present Communication Minister Andrzej Zielinski to honor agreements made by his predecessor Slezak. Their pleas, however, fell on deaf ears.
Since that time, the situation among the shareholders in Centertel has steadily worsened. At the beginning of September, majority shareholder TPSA suspended Centertel's general director, Edward Mier-Jedrzejowicz. Then, on September 29, TPSA voted down a motion put forward by Ameritech to go after a GSM license on the basis of the letter of intent, a move which seemed to put to rest any hopes of obtaining a GSM license.
Despite hardships, Ameritech is still trying to work out what Hribar termed "differences of opinion" with TPSA, in an effort to go after a GSM they feel already belongs to them.
"Ameritech understands very well the value of a GSM license," Hribar said. "But we feel very strongly that Centertel has kept to the terms of the letter of intent, and has invested substantial sums of money."
As part of the deal to operate NMT 450 system, Ameritech and France Telecom had to shell out $75 million to TPSA. Since then, Centertel as a company has invested $280 million in the analog system, which now covers 60 cities and a total of 70% of the Polish territory.
While TPSA has complained recently about their Centertel experience, the venture is bringing them around $30 million yearly in earnings (around $10 million from dividends and $20 million from interconnect fees).
Now, with its back against the wall and with the Communications Ministry expected to announce the opening of the GSM tender within days, Ameritech is ready to play hardball.
"As a representative of a company that controls a sizable investment portfolio, foreign investors will have to think twice if it turns out that obligations like ours are not honored," Hribar said, adding that discussions with the Communications Ministry and TPSA should be completed by the end of the month.
After that, the time for talk could be over.