UK government awaits One 2 One lawsuit

Mobile phone operator One 2 One yesterday launched legal action against the UK government, accusing it of acting unfairly in the third generation (3G) mobile phone licence auction.

One 2 One said it will sue the Department of Trade and Industry (DTI) over its decision to allow Vodafone AirTouch to delay payment for the licence it secured by up to 180 days.

However, the DTI said the government has not received any formal notification of the action and said it does not believe it is in anyone's interest to challenge the rules of the auction.

Last month's auction raised £22.5bn for the government and the first payments for the licences are due today. One 2 One is set to pay the full £4.003bn that it bid for licence D. Canadian Group TIW will pay £.438bn for licence A and BT is expected to pay £4.03bn for licence C.

Vodafone and its UK subsidiary Orange were able to bid separately in the auction and have been given a 60-day reprieve to demerge. Vodafone agreed to sell or demerge Orange to gain permission for its takeover of German company Mannesmann, but was unable to complete the move before the auction began.

The 60-day delay of payments, which could be extended by up to 180 days, has angered One 2 One. The operator believes that it could give Vodafone an unfair saving of up to £360m in interest.

Robin Saphra, public policy director at One 2 One, said: "The situation is clearly unfair and would allow Vodafone a distinct financial advantage. We are disappointed that we have had to make the decision to take legal steps to ensure a fair and level playing field among UMTS [universal mobile telecommunications system] licence winners."

However, a spokeswoman for the DTI said: "The government is satisfied that the 3G auction rules are fair to all parties, that they promoted an efficient auction and that they have complied with domestic and European law."