How the bidding ended

Omnitel, 4,740bn lire IPSE, 4,730bn lire Wind, 4,700bn lire Andala, 4,700bn lire TIM, 4,680bn lire Blu, 4,490bn lire Top five bids, 23,550bn lire (12.16bn euros)

The loss of a further 2.1bn euros is an additional blow to the Italian government which has already reaped 16.bn euros ($15bn, �10.3bn) less than it expected from the licensing round.

Similar auctions in the UK and Germany earlier this year had raised many billions of pounds and euros more than expected by either government.

The licence winners in the UK and Germany had paid an average of 630 euros per inhabitant.

But the successful bidders in Italy picked up licences for a bargain 211 euros per head of the Italian population.

Violated obligations

The Ministry of Communications originally said that Blu had "repeatedly violated its reserve obligations" and as a result it would be retaining the 4,000 trillion lire deposit it had lodged with the government.

"For Blu, there are signs of collusive behaviour which violate the reserve obligations," said Secretary of State for communications Michele Lauria.

The Blu consortium itself said it had withdrawn due to a rift between BT's shareholders.

Europe's 3G mobile auction proceeds

Germany, $46.1bn UK, $35.4bn Holland, $2.5bn Italy, $10.2bn

The new generation of third generation mobile phones will feature high speed internet connections and allow video on demand services.

Blu is one of four existing mobile phone operators in Italy, and its departure is a major boost to rivals backed by other European telecoms giants.

The five licence winners are Telecom Italia Mobile; Vodafone-controlled Omnitel; Wind, a France Telecom joint venture; Telefonica's IPSE 2000;and Hutchison Whampoa's Andala.