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Court freezes Blu deposit
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November 9, 2000: 9:46 a.m. ET
Italian court says govt must wait before seizing $1.8B deposit for UMTS auction
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LONDON (CNNfn) - Mobile-phone service provider Blu achieved a victory of sorts in its battle with the Italian government Thursday, winning a court ruling that a deposit Blu paid to participate in last month's auction of mobile-phone licenses should be frozen and not transferred to government accounts.
Judge Agostino Elefante ruled in favor of Blu's request to halt payment of the  2.1 billion ($1.8 billion) to the government. The company, which is part-owned by British Telecommunications PLC (BT-A), had lodged the money as a deposit to take part in Italy's auction of Universal Mobile Telecommunications Standard licenses to operate third-generation cell-phoen services, but unexpectedly withdrew from the auction after just two days of bidding.
Deposits paid by bidders that failed to win a license in the auction would normally be returned to the losing participant, but Blu's withdrawal prompted the Italian government to say it would keep the company's deposit. The abrupt pull-out ended the auction before prices had had a chance to rise to levels seen in other countries' recent license auctions, dashing hopes of a revenue windfall for the government.
Elefante said he believed some parts of an appeal filed by Blu to keep the money had legal foundation. He also warned that Blu could go under if it is forced to pay up. The money is currently in a bank account of Blu's financial advisers.
"(The court) has decided to uphold (Blu's) request, freezing the payment," said Elefante after the hearing. "If it were forced to pay, the group would be forced to close down with damage to its employees. It also appeared clear to us from a preliminary examination that the appeal contains some legally founded elements."
Blu has said that disputes between its shareholders forced it to quit the auction, and that it pulled out of the bidding in accordance to the rules.
"Blu I satisfied with the decision of the court today," said Andrea Barbieri, a spokesman for Blu.
The judge added the court would "soon" give a final ruling on the appeal.
The Italian auction raised only about 12.2 billion, around half as much as industry experts anticipated. In contrast, the German government netted 51 billion for six licenses in August and Britain landed 38 billion for five licenses in April. 
-- from staff and wire reports
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