Light Co. Ltd. (Belco) has launched a lawsuit against the Bermuda Telephone Co. Ltd. (BTC) alleging defamation.

The writ was filed in relation to an advertisement BTC placed in The Royal Gazette on August 26. In the advertisement, BTC explained why it was appealing Telecommunications Minister Senator E.T. (Bob) Richards order that the company had to connect Quantum to its network.

In a statement Belco said the advertisement contained defamatory statements.

"In this advertisement, BTC made defamatory statements that Belco had acted unlawfully in relation to the telecommunications license granted to Quantum by the Telecommunications Minister,'' Belco stated. "It is our position that the statements made by BTC about Belco were calculated to disparage the reputation of Belco and its business. The writ seeks substantial damages against BTC and an order restraining BTC from making any further defamatory statements against Belco.'' Belco holds a 47 percent stake in Quantum, a telecommunications provider which started operating in Hamilton this year in competition with BTC. However, Quantum needs a connection to BTC network so its customers can talk with BTC's customers.

A BTC spokeswoman said the company could not comment on the suit because nothing had been received in relation to it yet. She said the advertisement was published because BTC wanted to inform its customers about the reason for the court appeal.

"The advertisement was in response to what we saw as public attacks on BTC consisting of half truths and misinformation,'' she said yesterday.

BTC argues that it won't make the connection because Quantum's telecommunications licence is invalid. BTC claims that Quantum is a reseller because it leases its fibre-optic network from majority owner Belco Holdings Ltd., while its licence requires the company to establish and own its own facilities.

After delays in making the connection Senator Richards ordered BTC to connect Quantum to its network by September 3. However BTC appealed that order and took the case to Supreme Court. A four-day hearing into a stay against the Minister's order ended two weeks ago.

In response to BTC's arguments, Quantum has stated it has since purchased the source of the dispute -- the fibre-optic cable -- from Belco. Quantum said its telecommunications licence was valid from the start and was valid now.