Smart Telecom has announced this morning that it has been notified by Comreg that the offer of the fourth 3G licence has been withdrawn.
Smart said it was told by the regulator that it had failed to meet certain conditions in relation to Comreg's offer.
In response, Smart Telecom intends to initiate legal proceedings to enforce the award.
Smart chief executive Oisin Fanning described the Comreg decision as "surprising and disappointing", adding that the setback will not detract from the success of Smart's core business.
"In due course, I believe that we will be reinstated as the lawful recipient of the last remaining 3G mobile licence, but in any event we have the staff and the resources to further increase customer recruitment and build a sustainable and profitable telecoms business," Mr Fanning said.
On November 16th last, Comreg announced that it had awarded Smart the fourth and last Irish 3G mobile licence. This offer was subsequently accepted by Smart and on December 15th it made the initial payment of €56.75 million to Comreg.
Smart raised money through a bond which was underwritten by businessman Sean Quinn and Brendan Murtagh of Kingspan who owns 20 per cent of Smart.
Should the legal challenge fail then Eircom/Meteor is the most likely alternative candidate for the licence.