The Minister for Finance rejected fees originally proposed by the telecoms regulator for third generation (3G) mobile licences because there was no minimum bid level to enter the competition.

Disagreements over the advice and role of consultants in the negotiations on the costs of the licences also contributed to a year-long delay in the competition, Government records show.

Third generation mobile phone licences will enable companies to offer a range of multimedia services to consumers handsets.

Most states in the Europe Union have already issued these licences.

But a competition to award four licences in the Republic was delayed for a year here following a bitter dispute between the telecoms regulator, Ms Etain Doyle, and the Minister for Finance, Mr McCreevy.

This is likely to result in an official reprimand from the European Union and cost the Exchequer millions of pounds in lost revenue due to a sharp fall in telecoms valuations.

Records obtained under the Freedom of Information Act show Mr McCreevy wanted to maximise the net gain to the Exchequer by setting a high minimum bid price for the four licences on offer.

By contrast, Ms Doyle wanted to offer the licences to firms at a lower price to encourage new entrants to join the market and boost competition.

Under current legislation Ms Doyle has the right to design the bidding process but must obtain the sanction of the Minister on the fee to be set.

On December 20th, 2000, the Minister sent a letter officially refusing to give consent to the fees proposed by Ms Doyle.

Records show his primary concern was the lack of a minimum bid to enter the 3G competition.

Under Ms Doyle's first proposed fee structure, companies would be constrained by a maximum bid rather than a minimum bid.

In addition, licence fees would count for only 10 per cent in the "beauty contest" to award the licences. Other factors such as network roll-out and service provision would be more important.

The Department of Finance argued this may result in companies obtaining licences despite offering fees significantly below the levels acceptable for the Exchequer. It is understood Mr McCreevy wanted at least £400 million (€508 million) for the licences at this stage while the regulator was seeking half this fee.

Just two days before the letter was sent, Ms Doyle warned an official in the Department of Finance that any delay in the issue of the tender would result in a reduction in the fees payable to the Exchequer.

Ms Doyle and her officials also strongly objected to the findings of the Minister for Finance's adviser - DKM Economic Consultants - and argued it was trying to make the proposed competition an auction rather than a "beauty contest", the records show.

A second attempt to break the deadlock also failed and a compromise deal was finally signed just last month.

This should see licensees paying £310 million in fees over 17 years. On a discounted rate, this is significantly below the figure sought by the Minister.