New telecom operator S Tel has accused its IT vendor, Tech Mahindra, of discontinuing services abruptly without any prior intimation and is believed to have sought the Telecom Ministry''s intervention to resolve the issue.

According to sources, the telecom firm has also threatened to slap a legal notice for compensation on Tech Mahindra over the move.

The sources said S Tel -- which is facing a fund crunch -- has written to Telecom Secretary R Chandrasekhar, saying it was engaged in discussions with its call centre vendor (Tech Mahindra) on the payment schedule outlook.

"... But on August 29, 2011, Tech Mahindra has unilaterally discontinued our call centre and managed services," S Tel alleged.

This has resulted in a situation where S Tel is handling all customer care calls on its own, it added.

S Tel officials remained unavailable for comment. When contacted, a Tech Mahindra spokesperson said, "As per corporate policy, we do not comment on individual customer engagements." 

S Tel has been engaged in discussions with all its vendors, seeking a moratorium of 1-2 years on payments against standing invoices in view of a fund crunch due to the uncertain regulatory environment.

However, its vendors have resorted to disconnection of network equipment over non-payment of dues, resulting in "network connectivity" problems for its subscribers, the letter said.

S Tel had awarded a long-term IT outsourcing contract to Tech Mahindra in 2009. The contract also involved maintenance of the company's business and operational support systems.

The company offers GSM services in Orissa, Bihar and Jharkhand, Himachal Pradesh, the North-East, Assam and Jammu Kashmir. 

It had 33.17 lakh subscribers at the end of June 30, 2011.

S Tel is believed to have approached the DoT requesting it to not take coercive action against the company in case it is unable to meet the quality standards established by sectoral regulator Trai.

It has also requested the DoT to allow it to set up a call centre for redressal of customer grievances without obtaining a separate OSP license (meant for BPO/call centres), since it will offer the services to its own subscribers and not other firms.

In August this year, the telco had written to the DoT seeking its help.

"... The prevailing telecom environment, negligible funding by banks and conduct of the passive infrastructure vendors engaged by S Tel in resorting to blatant disconnection of our communication equipments... has brought significant strain upon our ability to even run our day-to-day operations, much less serve our subscribers as the company is in a severe liquidity crunch due to non/negligible funding by banks out of the sanctioned term loan facility," S Tel had said.