For all the complaints, unsuccessful bidders have yet to take decisive action to challenge the award of the licence to Esat Digifone, writes John McManus

THE whispering about the awarding of the second mobile phone licence began within days of the announcement last November by the…

THE whispering about the awarding of the second mobile phone licence began within days of the announcement last November by the Minister for Communications, Mr Lowry, that Esat Digifone had won the competition for the second GSM mobile phone licence.

Yesterday it came to a head with the Minister taking the unprecedented step of wheeling out six top civil servants to defend the integrity of the process.

It remains to be seen if the briefing will succeed in putting an end to the subsequent questioning of the process and the speculation about why Esat Digifone won. However, it has put the ball back in the court of those companies among the unsuccessful bidders that have persistently pursued the issue.

So far the unsuccessful bidders appear not to have given up. Within minutes of yesterday's conference ending, representatives of one of the losing consortiums was endeavouring to pick holes in the civil servants' statements.

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In particular, they homed in on the decision to cap at £15 million the amount that could be bid for the licences.

Mr Martin Brennan, the head of the team that evaluated the submissions and organised the competition, stated categorically yesterday that the Government approached the European Commission on the issue. "We proposed a deal to the Commission," said Mr Brennan.

Persona, the unsuccessful consortium that included Motorola, said last night that this contradicted the impression it had been given in letters and other communications from the Department. A Persona spokesman claimed it was under the impression that the Commission proposed the cap and pointed to statements by the Minister in the Dail last November to that effect.

A spokesman for the Minister said last night that his statement to the Dail last November that the Department entered discussion with the Commission after it raised legal arguments did not contradict his officials' version of events. The legal arguments raised by the Commission related to auctions and did not specifically call for a cap, he said.

The capping of the licence fee was undoubtedly good news for Esat Digifone as it would have been hard pressed to outbid companies with the financial muscle of Motorola and AT&T, another unsuccessful candidate.

However, the Department officials explained yesterday that it chose to propose a cap in order to avoid confrontation at a later date with the Commission, which is opposed in principle to such auctions.

The price paid for a licence in an auction has to be recouped from the business, thus pushing up prices, in the opinion of the Commission, while it can also put the incoming consortium at a disadvantage to an existing operator.

The licence fee is only the most recent in a series of questions that have been raised about Esat Digifone. The strength of its finances were questioned in the Dail Public Accounts Committee this week and the identity of some of its investors have also been queried.

Mr John Loughrey, Secretary of the Department of Transport, Energy and Communications, did his best to put both these subjects to rest yesterday. However, he declined to comment in any detail on Esat Digifone's finances.

Mr Loughrey also added that the Department was happy that it would have a good "fix" on the ownership of Esat Digifone. He said the Department had been shown a shopping list of the investors who would take up the .20 per cent of the consortium not owned by Esat Telecom and Telenor, the Norwegian state phone company.

Mr Loughrey declined to say if IIU, the company headed by the financier,

Mr Dermot Desmond, was on the list. IIU is expected to end up with 20 per cent of the company, held directly, for clients or placed with other investors.

Yesterday's press conference has gone much of the way to answer the questions. However, Esat Digifone can expect little respite until it actually starts service. The company is due to sign the licence finally next week and would meet its commitment to commence service in the autumn, Mr Loughrey predicted.

One thing is clear at this stage. After almost six months of constant questioning, the unsuccessful bidders have yet to uncover anything that would convince them to take any firm action.

John McManus

John McManus

John McManus is a columnist and Duty Editor with The Irish Times