TELNY Telenor ASA (QX)

An Indian ministerial panel Tuesday approved a proposal to appoint by July an auctioneer for the bandwidth sale of basic mobile phone services, after the Supreme Court set an Aug. 31 deadline for the government to complete the auction.

The move follows the country's top court order in February to cancel 122 licenses issued to several companies in 2008. It cited irregularities in the licenses' allocation, jeopardizing billions of dollars invested in the country by several local and foreign companies.

It also directed the government to reallocate the cancelled bandwidth through auctions and asked the telecom regulator to outline the rules of the auction. The affected companies can operate till Sept. 7.

However, the government had petitioned the court saying the bandwidth auctions could take as much as 400 days to complete. It also drew a timeline to complete the process by March 2013, which the court rejected last week and then set the Aug. 31 deadline.

The Department of Telecommunications will soon invite bids from companies interested in conducting the auctions on behalf of the government, federal Telecommunications Secretary R. Chandrashekhar told Dow Jones Newswires.

Once the auctioneer is finalized, the department will float an investors' document detailing the process and will meet investors, Chandrashekhar added. He didn't elaborate.

The Indian joint venture of Norway's Telenor ASA (TEL.OS)--Unitech Wireless Ltd.--whose 22 licenses face cancellation as a result of the order, Tuesday told the court that it would challenge the regulator's proposals to auction just one slot, saying it would lead to scarcity of spectrum and push up the auction price.

Separately, Tuesday, the Supreme Court postponed to May 10 its hearing of a plea submitted by the government about reviewing certain aspects of an earlier judgment cancelling the 122 licenses.

The government's plea primarily relates to the applicability of the "first-come, first-served" policy followed in 2008 to allot telecommunication licenses.

The apex court, in its February judgment, has called that policy "arbitrary and unconstitutional."

The government, in its plea, said that the court "erred" in calling the process illegal and that the matter was "beyond the jurisdiction of courts."

The plea seeks a clarification on an appropriate way to allocate natural resources, including mines. It isn't seeking a review of the license cancellations.

-By R. Jai Krishna, Dow Jones Newswires; +91-9886929464; dhanya.thoppil@dowjones.com

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