The telecommunications regulator, Ms Etain Doyle, will decide in the next few days whether to appeal a High Court ruling ordering her to reconsider her decision on the Republic's third mobile telephone licence. Ms Doyle said she had initially intended to take the case to the Supreme Court, but was now studying Ms Justice Mac ken's 247-page ruling and may decide to press ahead with a fresh decision.

Sources close to the regulator's office said the team was stunned by the judgment, which noted that changes were made to drafts of important documents and ruled that a reasonable person could perceive bias against Orange. The judge also said the regulator had failed to give sufficient reasons to Orange for her decision.

Orange said yesterday it was pleased with the decision and said it still hoped to bring a "state-of-the-art mobile phone service to Irish consumers". Meteor, the company originally granted the licence, said it was disappointed and was considering an appeal to the Supreme Court.

Legal sources said Ms Doyle was still more than likely to lodge an appeal, but warned that because there were no slots available in the Supreme Court calendar this term, such a move would immediately tie up the process for at least another four months.

The regulator will be evaluating several options and is likely to try to balance the issue of fairness, the interests of the consumer, the threat of further legal action and the prospect of her office emerging from the affair with credibility.

To comply with the court ruling, she must consider afresh the two applications for the licence. It could be argued that she must evaluate only these bids, purely on the same basis as the first time around.

The problem with this is that the bid documents are now more than 18 months old and are, to a significant degree, out of date in such a fast-moving industry.

To counteract this, she could take the view that the court ruling annuls the final decision, leaving the competition still open. She could then invite supplementary documents to the bids, but this would, in effect, be asking both Orange and Meteor to submit new bids, and either or both might object, saying the original bids should be assessed on a "snapshot" basis.

Ms Doyle could also take the view that the contest is fundamentally flawed and start from scratch, inviting new applications. Such a strategy could also provoke legal challenges from either Meteor or Orange, who made their original applications in good faith.

Meanwhile, the value of the licence itself would appear to be diminishing. Mobile phone penetration in the Republic is already around 35 per cent, and rising fast. By the time any new service is introduced, Eircell and Esat Digifone could easily have captured up to 50 per cent, making the marketing task of the new entrant far more difficult.

Outside the Republic, telecommunications companies are watching the case with interest. Industry sources said the delay in awarding the licence and the cost of litigation - now said to be close to £10 million (€12.7 million) - did not give a good impression.