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Wednesday, 24 January, 2001, 18:09 GMT
BT escapes Italian wrath
Man dials on a mobile phone
BT has already amassed heavy debts because of other 3G licences
The Italian government has lost its legal battle with the BT-led telecoms consortium Blu, after the group abruptly withdrew from Italy's third generation mobile phone auction in October last year.

The Italian court ruled that the consortium, named Blu, could keep its 2.1bn euros ($1.7bn, 1.3bn) deposit and that it had acted legally when it suddenly withdrew from the auction.

Blu's "irregular" departure from the auction left only five bidders for five licences, which were then sold at dramatically lower prices than the government had expected.

The Italian government fought to keep Blu's deposit as compensation for the reduced money flowing into the Treasury's coffers.

The Italian government says it has not decided yet whether to appeal against the ruling.

Dashed expectations

How the bidding ended
Omnitel, 4,740bn lire
IPSE, 4,730bn lire
Wind, 4,700bn lire
Andala, 4,700bn lire
TIM, 4,680bn lire
Blu, 4,490bn lire
Top five bids, 23,550bn lire (12.16bn euros)
The loss of a further 2.1bn euros is an additional blow to the Italian government which has already reaped 16.bn euros ($15bn, 10.3bn) less than it expected from the licensing round.

Similar auctions in the UK and Germany earlier this year had raised many billions of pounds and euros more than expected by either government.

The licence winners in the UK and Germany had paid an average of 630 euros per inhabitant.

But the successful bidders in Italy picked up licences for a bargain 211 euros per head of the Italian population.

Violated obligations

The Ministry of Communications originally said that Blu had "repeatedly violated its reserve obligations" and as a result it would be retaining the 4,000 trillion lire deposit it had lodged with the government.

"For Blu, there are signs of collusive behaviour which violate the reserve obligations," said Secretary of State for communications Michele Lauria.

The Blu consortium itself said it had withdrawn due to a rift between BT's shareholders.

Europe's 3G mobile auction proceeds
Germany, $46.1bn
UK, $35.4bn
Holland, $2.5bn
Italy, $10.2bn

The new generation of third generation mobile phones will feature high speed internet connections and allow video on demand services.

Blu is one of four existing mobile phone operators in Italy, and its departure is a major boost to rivals backed by other European telecoms giants.

The five licence winners are Telecom Italia Mobile; Vodafone-controlled Omnitel; Wind, a France Telecom joint venture; Telefonica's IPSE 2000;and Hutchison Whampoa's Andala.

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See also:

19 Oct 00 | Business
Italian mobile auction begins
17 Oct 00 | Business
Threat to BT Italy deal
24 Oct 00 | Business
BT loses in Italian mobile auction
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