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HC stays mobile licence auction

The Bombay high court has barred the government from issuing new mobile phone licences, threatening to derail the auction process for them at a crucial time, leading financial dailies said on Wednesday.

The government is due to hold the third and final round of price bidding on Thursday for private firms that want to be the fourth cellular operator in India's 21 telecom zones. The government expects to award these licences by the end of August.

Each telecom zone now has two private operators and the slot for the third is reserved for a state-run telecom company.

The Business Standard newspaper said the Bombay high court on Tuesday ordered an interim stay on the finalisation of the bidding following a case filed by an employees' union of state-run telecoms giant Videsh Sanchar Nigam Ltd.

Union officials and their lawyers were not immediately available for comment.

The union had petitioned the court against the government's decision preventing VSNL and two other state-run firms, Mahanagar Telephone Nigam Ltd and Bharat Sanchar Nigam Ltd, from participating in this auction.

The government had barred VSNL from bidding, saying its rules did not allow competition between state-run firms.

This auction offers telecom firms their only chance to enter or expand their presence in the high-profile fast-growing business.

The Financial Express newspaper said the court had allowed VSNL to participate in the bidding process.

The New York Stock Exchange-listed VSNL, a monopoly overseas telecommunications service provider and the country's largest Internet access provider, is among firms being privatised by the government this year.

A government official said he had not seen the court's decision.

"We'll take a view only after we have seen the judgement," Shyamal Ghosh, the senior bureaucrat in the telecoms ministry, told Reuters.

The judgement however surprised the cellular industry.

"I'm very surprised and disappointed. The process was in a very advanced stage. The cellular market could have seen more competition in just three months," said T V Ramachandran, secretary-general of the Cellular Operators Association of India.

Leading private telecoms group Bharti Enterprises and the Indian unit of Hong Kong's Hutchison Telecom were among the frontrunners in the race to bag the licences.

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