Trader to sue T-Mobile for GBP 625m

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Former GSM Gateway operator VIP Communications said last week it had prepared a staggering £625 million damages claim against T-Mobile.

T-Mobile maintained it had not been issued with a claim, saying: "There is no substance to the figure of £625 million."

VIP, now in administration, was axed by T-Mobile in 2004 for selling "illegal" GSM Gateways, or SIM boxes. It has been engaged in a long-running legal dispute with T-Mobile ever since.

T-Mobile was unequivocal in its response. "VIP complained to Oftel [Ofcom] around five years ago that T-Mobile had discriminated against it by terminating services to illegal SIM boxes it was operating," it said.

"VIP also threatened to sue us at that time, but have never done so. Ofcom found in our favour.

"As far as we are concerned, VIP has no grounds for a claim against us and there is no substance to the figure of £625 million."

GSM Gateways enable calls originating from fixed-line phones to be routed over mobile networks, allowing customers huge cost savings on ‘fixed’ calls to mobile numbers.

VIP argued in the High Court of Appeal in early March it was buying EU-approved kit from Germany, installing UK T-Mobile SIMs, then re-selling them as least-cost routing solutions to the dealer market.

It claimed SIM boxes were resold with T-Mobile’s permission. It said it agreed an order in 2004 for 4,000 T-Mobile SIM cards, was granted 400, and connected each to a T-Mobile Business 1 50,000 plan, enabling 50,000 peak-time minutes to any mobile or landline in both the UK and Europe.

VIP founder Tom McCabe said: "We can only sue for damages once the appeal has concluded.

"If we do not succeed in the High Court of Appeal, we will be successful in the European Court of Justice, because T-Mobile has broken European law."

Its £625 million damages claim is based on projected earnings of £57 million per year – which it claims is in line with T-Mobile’s own calculation of its potential loss of earnings from VIP’s GSM Gateway solution.

VIP claims it was set to float on the AIM market and calculates damages according to a stock market price/earnings ratio of 11:1 for mobile telecoms companies.

GSM Gateway operators claim the mobile networks colluded in switching off services to them unilaterally in 2004 for commercial reasons – that the incumbent networks stopped supply as call volumes terminating on their networks were reduced dramatically and hit their revenues.

Around 40 GSM Gateway operators await the High Court of Appeal’s decision on VIP.

Sources said they are ready to launch their own class action against T-Mobile. A further nine are considering a class action against O2, depending on the VIP verdict.

In a parallel case, Floe Telecom is awaiting a verdict from the High Court of Appeal on the termination of its supply deal with Vodafone.

The Competition Appeal Tribunal viewed the Floe and VIP cases as "Siamese twins", except it concluded Floe had not asked permission from Vodafone to re-sell its SIM cards in GSM Gateways. It ruled in Vodafone’s favour.

The tribunal said VIP had asked permission. An Ofcom report confirms: "T-Mobile confirmed when it provided SIMs to VIP, it understood these SIMs would be used by VIP in commercial multi-user GSM Gateways."

Ofcom appealed the Floe decision to the High Court in light of the tribunal’s findings in the VIP case, and the similarity of the two cases.

A verdict on Floe is expected first.

 

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