SC rejects appeals in telecoms licence dispute

A view of the Supreme Court building is seen in New Delhi December 7, 2010.

NEW DELHI (Reuters) - The Supreme Court on Thursday upheld a decision to revoke the operating licences of several mobile phone companies after police said the sale of the licences was tainted by corruption.

Four companies had appealed against the Supreme Court's decision a year ago to scrap 122 permits sold in 2008.

Police say some of the companies colluded with government officials to side-step competitive bidding and acquire licences for less than their fair value.

Eight carriers including the local subsidiary of Russia's Sistema (SSAq.L) and Indian firms Idea Cellular (IDEA.NS), Videocon Telecommunications and Tata Teleservices, were affected by the court order.

None of the four companies were accused in the case.

The CAG said as much as $33 billion was lost to the government because of the lack of competition in the tender.

The resulting scandal deepened a crisis of confidence in India's government and the permit cancellation order led to a diplomatic row with Russia, whose government owns 17 percent of Sistema's Indian unit and has pressed India to resolve the case.

Former telecom minister A. Raja and several corporate executives are on trial over the scandal.

On Thursday, Sistema's Indian unit, Sistema Shyam TeleServices, called the rejection of its appeal "unfortunate" and said the company's shareholders would decide its future strategy.

It had pinned its hopes on the appeal and must now bid in an auction due in March if it wants to continue serving the world's second-biggest telecommunications market by customers.

Sistema Shyam, Idea Cellular, Videocon and Tata Teleservices had filed separate petitions in the last stage of appeal available in Indian law.

The court ruled that none of those petitions were valid.

Sistema Shyam uses the less popular CDMA technology and had argued that its case was different from the others because there had been no competition for CDMA airwaves in the 2008 sale. It said most bidders were interested in GSM services.

For now, none of the companies have been forced to withdraw services because of the top court's ruling last year.

Idea Cellular has already bought airwaves in seven zones where its operating permits are due to be scrapped. Videocon, which is to lose 21 permits, has won back airwaves in six of them.

(Reporting by Devidutta Tripathy and Suchitra Mohanty; Editing by Tom Pfeiffer)