Scandal threatens to disrupt India's mobile phone market

India's most senior court has ordered the government to cancel 122 licences granted to telecoms companies during an irregular sale of mobile phone spectrum.

The verdict will probably disrupt the country's massive mobile market and is a further embarrassment for the scandal-riddled government of Prime Minister Manmohan Singh.

The 2008 sale of second generation, or 2G, mobile phone licences at cut-rate prices in a bewildering "first-come, first-served" process netted the government only 124 billion rupees (£1.6bn). Government auditors said the sale might have cost the Treasury as much as £22bn in potential revenue. The court ruled that licences granted in that deal should be scrapped and a fresh auction should be held.

Analysts expect the auction to raise an estimated 1 trillion rupees. That might be less than the spectrum would have garnered at the time, because of the subsequent introduction of 3G technology here and the consolidation of the main market players.