BANGALORE, July 27: The ministry of communications has threatened Modicom Network, the cellular service provider for Karnataka telecom circle with cancellation of its licence for failing to pay licence fee and submit required bank guarantee.

As per the licence agreement, Modicom was required to pay an amount of Rs 15.55 crore as second year's first quarter fee, which was due on April 4, 1997 and second quarter fee of Rs 31.65 crore due on July 4, 1997. The company was also required to deposit a bank guarantee worth Rs 126.64 crore equal to the second year's licence fee on or before April 4, the date for the start of second year of licence.

The ministry has warned through letter no. 842-53 (A)/95-VAS/vol II dated July 17, that since the company has failed to honour the commitments in the licence agreement, it is considered as a violation of condition no 18.2 (III) and 19.2 of the licence agreement.

Modicom had earlier assured the communications ministry vide a letter dated May 21, 1997 that it would submit the bank guarantee of the enhanced amount and pay the licence fee for the first and second quarter of second year for Karnataka circle by July 4. The ministry's letter says that the company has failed to honour even this assurance.

Calling upon the company to make immediate payment of defaulted amount alongwith due interest and furnish the necessary bank guarantee within 30 days, the ministry warns that any failure on the company's part will meet with termination of the licence. It also warns that in such an eventuality, the amount due will be recovered by invoking and encashing the already available bank guarantee as per the terms of the licence agreement.

When contacted, the officials at Spice Telecom, the brand name of Modicom, denied knowledge of any such letter. Last month, the company had sought more time from DoT to pay the licence fee for the second year, which was accepted, said the officials. Spice also had sought assignability of licence from DoT for tying up funds to pay the licence fee.

Spice Telecom is promoted by Modicorp, Distacom of Hong Kong and Motorola. The company had bagged cellular licence for Karnataka and Punjab circles. Spice started operations on May 16 this year and at present has a subscriber base of 4,500 in Bangalore, added the officials.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.