Bharti Airtel, Vodafone challenge airwave auction

Men make phone calls as they sit on a railing with Bharti Airtel billboards installed on it, along a sidewalk in Kolkata February 1, 2013.

NEW DELHI (Reuters) - India's two biggest mobile phone operators, Bharti Airtel Ltd (BRTI.NS) and Vodafone India (VOD.L), challenged in court a government move to auction airwaves in a band they already use.

It was not immediately known when the High Court of Delhi will hear the pleas, but Vodafone Group Plc's Indian unit said it expected a hearing soon. Any order in favour of the companies could derail part of the auction due in March.

India is selling airwaves, along with stakes in state-run companies, to cut its fiscal deficit. It raised less than a quarter of a targeted $7.4 billion from an auction in November.

A senior official has said all airwaves being auctioned in March are worth at least $3.7 billion.

Bharti Airtel and Vodafone India use the 900 megahertz frequency band in some service areas. The government is putting the frequency on the block in three cities - Delhi, Mumbai and Kolkata - where existing permits are valid until November 2014.

The companies are required to win back the airwaves to continue using that frequency band, or bid for the less-efficient 1800 megahertz band. This would mean they would have to build more mobile masts and invest more on technology.

The minimum bidding price for the 900 megahertz band has been set at double the price for the 1800 megahertz one.

"Our decision to undertake this legal recourse is only aimed at protecting our legal and contractual right with regard to 900 megahertz spectrum and ensuring business continuity," Bharti Airtel said in a statement.

Vodafone in a statement called the government's move to withdraw the 900 megahertz airwaves as "arbitrary" and that it is "entitled to a fair and reasonable extension of its licence as per mutually agreeable terms".

India, which is also seeking bids for airwaves in the 1800 megahertz and 800 megahertz frequency bands in the March auctions, has asked bidders to submit interests by Friday.

(Reporting by Devidutta Tripathy; Editing by Louise Heavens)