THE double digit growth of LIME Jamaica’s mobile subscriber base in the three months to September 30 allowed operating profit to jump four times over year-earlier levels but the telecommunications firm still made a net loss of over $600 million.

Concurrently, the telecom announced that it breached Jamaica Stock Exchange (JSE) rule — 402 — due to minority shareholders holding less than 20 per cent of the company.

“No decision has been taken as to how the matter will be resolved,” said LIME in response to Jamaica Observer queries when asked if the parent would sell some two per cent shareholding (roughly valued at $31 million at 17 cents a share) to local shareholders in order to rectify a breach.

The parent, which is in the process of shifting its operations from the UK to the US, currently holds some 82 per cent.

The JSE indicated that LIME is in discussion to rectify the issue within six months.

The $603.9 million loss during the second quarter reflected a significant improvement over year earlier levels at $1.3 billion in 2012.

LIME benefited from a 23 per cent rise in its mobile subscriber base due to cuts to its calling rates by as much as two-thirds calling in early June as part of a marketing campaign facilitated by regulatory rate cuts.

Total revenue at the frim grew 10 per cent to $4.4 billion in the quarter due to mobile, business client, and broadband revenue growth.

This aided a spike in operating profit before interest, tax, depreciation and amortisation (EBIDTA) to $465 million compared with $117 million a year earlier. Consequently LIME’s management describes the results as relatively positive.

“Our business transformation is now well under way and is clearly having a positive impact on our financial performance,” said LIME Jamaica’s CEO Garry Sinclair in a statement accompanying the financials. “EBITDA increased 400 per cent this quarter over the same quarter last year and shareholders will continue to benefit from this positive direction as we continue to focus on our customers, our colleagues and our costs.”

The reduction in LIME rates actually preceded a regulatory adjustment by the Office of Utilities Regulation (OUR).

LIME tightly manages information on its network size, and did not disclose its size in the September quarterly report.

The OUR in its Cost Model for Mobile Termination Rates – Determination Notice, May 2013 described Digicel Jamaica as holding 84 per cent mobile market share in a two-player market which places LIME at 16 per cent prior to the rate cut.

When contacted, the JSE referred the Observer to its JSE Rules book and amendments, which outlines the procedures to rectify a breach. Failure to rectify the 402 breach includes possible delisting or suspension

“The Exchange may in its absolute discretion suspend trading in the securities during the first six-month period and/or during the extended period permitted by the Exchange,” according to the JSE Rules amendment on rules 402. “The exchange shall also delist the company if it fails to correct the said breach by the expiry of the first six-month period or the extended period where applicable.”

LIME indicated in its financials that the company is a 79 per cent subsidiary of CWC CALA Holdings Limited, incorporated in Barbados, and the ultimate parent company is Cable & Wireless Communications plc, incorporated in England. It adds that another subsidiary of Cable & Wireless Communications plc holds an additional three per cent of the issued ordinary stock units of the company.

“On October 8, 2013 the Regulatory Management and Oversight Committee (RMOD) of the JSE notified the company that in these circumstances , it found the company in breach of rule 402B of the JSE Rules,” said LIME in its recently released financial statements. “The notice provides that the breach be remedied within six months. The company has since notified the parent company and has been in correspondence with the JSE and RMOD with a view to resolving the matter.”