Indian Supreme Court Cancels Wireless Licenses in Tainted Sale MUMBAI - The Supreme Court of India issued a stinging rebuke to the government Thursday by canceling 122 telecommunications licenses sold at below-market prices in 2008 that have been the subject of a long-running controversy. The move comes after several years of litigation in what has popularly become known in India as the "2G scam." The controversy, involving wireless phone licenses awarded at a price set in 2001, became the rallying cry for a large anti-corruption movement that dominated the public debate in India last year. One government auditor estimated in 2010 that the government had lost as much as 1.8 trillion rupees, or $40 billion at the time, by not using an auction to sell the licenses. The Supreme Court, calling the award of permits "arbitrary," ruled Thursday that the licenses - some of which are held by joint ventures involving foreign companies like Telenor of Norway and Etisalat of the United Arab Emirates - were "null and void." The canceled licenses will affect about 5 percent of India's nearly 900 million mobile subscribers. Many of the companies that received the licenses never actually started operations, as the industry was already very competitive, government officials said Thursday. They added that subscribers to services from companies whose licenses had been canceled could switch to other providers. Still, analysts expect the decision to send ripples across corporate India and among foreign investors that do business in the country. The ruling could potentially wipe out investments in the Indian telecommunications industry totaling billions of dollars. Banks and private equity investors who lent to those companies, or who invested in them, also stand to lose a lot of money. Rishi Sahai, director of the consulting firm Cogence, estimates that $25 billion to $30 billion in investments were made in companies affected by the Supreme Court decision, and he said that the ruling would have repercussions beyond the telecommunications industry. "This will have a hugely negative impact on future foreign investment because it sends a signal that a license issued by the government of India has no meaning and could be considered null and void because of a judgment two or three years down the line," he said. In the long run, however, the decision will be good for the sector because it will eliminate uncertainty, he said. Kamlesh Bhatia, research director at Gartner in Mumbai, said that the ruling was part of a welcome change from the "virtual paralysis in terms of policy and decision making, which was starting to hurt the industry." The stocks of companies with links to the permits awarded in 2008 fell sharply on the Mumbai exchange Thursday. Shares of the real estate company Unitech, one of the winners in the auction and Telenor's Indian partner, were down about 7 percent in midday trading. "We have been unfairly treated as we simply followed the government process we were asked to," Uninor, a joint venture between Telenor and Unitech, said in a statement. We are shocked to see that Uninor is being penalized for faults the court has found in the government process. The company said it had 36 million subscribers and 17,500 employees in India. Meanwhile, shares of telecommunications companies not involved in the 2008 sale rose sharply on expectations that they would benefit from having fewer competitors. Bharti Airtel, the largest wireless phone company in India, was up more than 6 percent in midday trading. Several corporate executives and other government officials are also awaiting trial, though many of them are free on bail. Mr. Raja and the other accused have denied any wrongdoing. The Supreme Court also ruled Thursday that a lower court would consider whether the conduct of a senior government official, Palaniappan Chidambaram, the finance minister at the time of the license sale and now the minister who oversees domestic security, should be investigated. "We have to examine the judgments and its implications," Pranab Mukherjee, the current finance minister, said in New Delhi.