The High Court challenge to the Telecommunications Regulator's decision to award the third mobile phone licence to Meteor resumes tomorrow. However, informed sources believe it will be the end of July at least, before the issue is finally resolved.

The challenge by Orange which has mobile licences in Britain and Northern Ireland, has delayed the awarding of the Irish licence by at least one year. The licence had been awarded last June to Meteor, a consortium which is led by US-based Western Wireless (60 per cent shareholder) and whose Irish shareholder is RF Communications, a 30 per cent shareholder.

However, Orange objected and the matter is due for hearing again this week. It believes not awarding the licence to Orange will seriously disadvantage Irish customers. The legal proceedings also delayed the entry to the market for a competitor to Esat Digifone and Telecom Eireann.

Even if the Regulator, Ms Etain Doyle's decision is upheld, it will be up to nine months before Meteor gets to market. This means Meteor, who would be expected to pitch its wares mainly at the mass market providing cheaper tariffs and phones, will miss the all-important Christmas market.

Eircell, the State-owned mobile phone operator launched its prepaid offering in November 1997. In the seven weeks to Christmas, the company sold 70,000 phones. Esat Digifone which launched its Speakeasy pre-paid option last year, also sold huge numbers of phones at Christmas.

Operators say pre-paid is the way mobile telephony is developing and the Christmas market is vital. The launch of pre-paid by the two incumbents means there are now over 1 million mobile phone users in the Republic.

Sources believe it will be extremely difficult for Meteor (or Orange) to make a major impact on the market, although they do believe the entry of a third operator will help grow the market. "What can Meteor if they are awarded the licence offer that Eircell or Digifone can't respond to?" asks one source.

It is understood that Meteor itself believes that winning market share will be very difficult as the delays means the two operators are growing their share and strengthening their presence with customers.

Meteor promised lower tariffs, targeting customers who have never had a mobile phone and have to pay their own bills. However, it is understood that Meteor has contacted companies about providing billing services, which sources say, suggests that the company will also be targeting contract customers - customers who pay monthly rental and bills - should the Regulator's decision be upheld, of course.

Sources say that rolling out a network will be extremely difficult, given the hostility towards masts. One of the terms of the licence is that the winner must provide coverage of one-third of the population within two years, but just covering Dublin would meet this criteria. The third operator could then arrange roaming agreements - whereby part of its calls where it does not have coverage could be carried by the other two operators for a fee.

Sources said this weekend that Meteor had had very little discussion with the two operators regarding this and other issues such as site sharing.

A source said the company seemed to be very inactive, while another said it appeared that the US investors, were adopting a wait-and-see approach regarding the outcome of the High Court case. "It is very difficult for Meteor," said one observer, "they cannot do much until the case is resolved one way or another."

A Meteor spokeswoman said the company had lodged a number of planning applications for erecting mobile infrastructure. She confirmed that the company, which currently employs around 40 people, with a similar number on contract, was also seeking a chief executive officer.

Meanwhile, Esat Telecom has played down a report in yesterday's Sunday Times that US cable group Global Crossing was considering a $1 billion takeover bid for the company. "It's news to me," said Mr Denis O'Brien, Esat's chairman and chief executive.