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WARSAW -- A seven-year battle between Deutsche Telekom AG and Vivendi SA for control of Polska Telefonia Cyfrowa, or PTC, has taken its toll onthe Polishwireless operator.

The leader of Poland's mobile-telephone market in revenue terms as recently as 2005, PTC has slipped to third, overtaken by Centertel, the wireless arm of France Telecom's local unit Telekomunikacja Polska SA, and Polkomtel SA, which is partly owned by Vodafone Group PLC.

Analysts expect PTC's position to deteriorate further, as the continuing disputeleaves the company without stable leadership or a coherent strategy.

"For a long time PTC and Deutsche Telekom denied the ownership disputehad any impact onthe operating business," says Eva Bakowicz, European telecommunicationsanalyst at economic-research firm Global Insight Inc. of London. "Looking at the numbers, they can't deny [it] anymore."

Deutsche Telekom and Vivendi are facing off over a 48% stake in PTC, which each of them claims based ondeals with Polishconglomerate Elektrim SA, the stake's original owner. Deutsche Telekom and Vivendi have locked horns over the matter in courtrooms in Austria, Germany, France, Poland and the U.S. since litigation onthe matter began in December 2000.

In early 2005, Elektrim and Deutsche Telekom ousted Vivendi representatives from PTC in a boardroom coup that is still being challenged legally. After that confrontation, PTC dropped Vivendi's plans to build up PTC's local prepaid and billed brands -- Heyah and Era. But the legal stalemate also kept Deutsche Telekom from implementing its own preferred option of switching PTC to its global T-Mobile wireless brand.

Meanwhile, competition in Poland's wireless market -- which reached 37 million customers and $7.79 billion in sales in 2006 -- has intensified. March saw the launch of a new wireless operator, P4, which poached much of its creative staff and marketing strategy from PTC's Heyah. Centertel has moved from third to first place in revenue terms in the past three years, thanks largely to heavy promotion of its Orange brand.

PTC's share of Polishmobile-telephony revenue fell from nearly 38% in 2004 to 31.9% in the first quarter of this year. PTC's sales grew by just 2% year-to-year in the first quarter, to 1.73 billion zlotys, or about $611 million, compared with 7.4% at Centertel and 6.9% at Polkomtel.

Deutsche Telekom, Germany's former telecommonopoly, and French media-to-telecommunicationsconglomerate Vivendi both have a lot at stake in the disputeover PTC. Deutsche Telekom started consolidating PTC in November 2006, after installing its own management based onwhat the German company believed was its rightful ownership of the 48% stake, plus the undisputed 49% stake it already owned.

PTC is now Deutsche Telekom's fourth-largest wireless business by revenue behind its T-Mobile units in Germany, the U.S. and U.K. Deutsche Telekom operates in 12 countries.