UK spectrum auction to go ahead after legal challenge blocked

(Adds Three statement)

LONDON, Feb 13 (Reuters) - British telecoms regulator Ofcom said on Tuesday it could proceed with the sale of new mobile airwaves after a London court denied operator Three permission to mount another legal challenge to the rules it had set for the auction.

Three, the smallest of Britain's four networks, and the biggest operator BT's EE had challenged the level of cap set by Ofcom on the amount any one operator can own, but both cases were rejected by the High Court in December.

"The Court of Appeal has very firmly rejected Three's application for permission to appeal on all grounds," an Ofcom spokesman said.

"We welcome this decision, and will now press ahead with releasing these important airwaves. This new capacity will allow mobile companies to offer more reliable reception, and to prepare for future 5G services."

Three, which is owned by Hutchison Telecommunications, wanted the cap set at 30 percent rather than the 37 percent set by Ofcom.

A Three spokesman said the company was disappointed by the ruling, but added the decision to appeal was the right one.

"First of all this has not caused any delay to the delivery of 5G services to UK consumers which are not expected to rollout until 2019/20, according to Ofcom," he said.

"But more importantly, our appeal is about competition in the UK mobile market and spectrum distribution is the single biggest factor in maintaining a competitive market."

It said it still believed a cap set at 37 percent was too high if the objective was to have a competitive four player market and it would like to see it lower in the future. (Reporting by Paul Sandle; editing by Stephen Addison and David Evans)