As the Polish Communications Ministry advances with plans to license two Global System for Mobile communications cellular networks, Ameritech International is pursuing legal action against the government agency, alleging it breached a letter of intent signed in 1991 that promised Centertel-of which Ameritech owns 24.5 percent-a license to operate digital cellular once spectrum became available.
But legislation passed last summer by the Polish Parliament requires the two GSM licenses be awarded through competition, counters the ministry.
The conflict is not new. Herbert Hribar, vice president of operations for Ameritech International, said the two sides have feuded for months over the issue. “There’s been no flexibility on either side,” stated Hribar.
Last month, Ameritech’s attempts to negotiate graduated to arbitration.
Telekomunikacja Polska SA, Poland’s government-owned telecom operator, owns 51 percent of Centertel, while France Telecom holds the remaining 24.5 percent share in the company and is seeking similar action against the ministry, said Ameritech.
Several years ago, when Ameritech and France Telecom sought their current cellular license, the only spectrum available was at 450 MHz, said Hribar. The two donated a combined $75 million to the Polish government for Centertel’s license and for the government’s commitment to grant Centertel a digital cellular license as a natural upgrade.
Centertel currently is Poland’s sole cellular operator.
Seeking the license promised to Centertel, said Hribar, Ameritech and France Telecom have proposed two concessions to the Polish Communications Ministry. The companies stated they would match the highest bid among other GSM license contenders as payment for a license, and offered to restructure Centertel’s board of directors such that Telekom Polska would gain a greater proportion of representation. Neither offer has satisfied the ministry, said Hribar.
The ministry reportedly has considered granting Centertel a forthcoming 1.8 GHz license to fulfill terms of the 1991 letter. But Hribar said that isn’t financially feasible.
Ameritech has launched its international arbitration under United Nations rules. Both Ameritech and the Polish Communications Ministry recently have selected an arbitrator. Those two individuals are expected to choose a third and independent arbitrator and the trio will decide the case.
Foremost, Ameritech is requesting the ministry award Centertel a license as promised, said Hribar. But as the situation presently stands, arbitration will continue. Once a judgment is found-which could be months or a few years, said Hribar-if it favors Ameritech and if Poland has issued the two GSM licenses in the meantime, Ameritech will demand Poland pay “hundreds of millions of dollars” in lost investment and denied profits, said Hribar.
Hribar cited Ameritech is protected by a 1990 business and economic affairs treaty between the United States and Poland, which safeguards U.S. companies from being subject to unfair practices of governments in countries where those companies have foreign investments.
