India Orders Vodafone, Idea Cellular to Stop 3G Services in Some Areas

By R. Jai Krishna

NEW DELHI--India's Department of Telecommunications has ordered Vodafone Group PLC's (VOD) local unit and Idea Cellular Ltd. (532822.BY) to stop third-generation services by Monday in several service areas where they doesn't hold bandwidth, a top government official said Friday.

It also imposed a fine of 5.50 billion rupees ($100.3 million) on Vodafone India Ltd. and 3.0 billion rupees on Idea Cellular, said this official who didn't want to be named.

Vodafone India will have to stop its 3G services in 11 service areas and Idea Cellular in 10.

A person with direct knowledge of the development at Vodafone India and an executive of Idea Cellular confirmed the department's order. They also declined to be named.

The order comes a day after a court lifted a stay on the execution of a government order to stop Bharti Airtel Ltd. (532454.BY) from providing 3G services in seven service areas where it doesn't have bandwidth.

Bharti, Vodafone India and Idea Cellular in July 2011 entered into agreements to share their 3G networks which allowed their customers to use such services in areas where at least one company has bandwidth. The telecom department later that year asked the companies to end the pacts, which it said were against the country's telecom law.

But the companies got a stay on that order from the Telecom Disputes Settlement and Appellate Tribunal, which sorts out litigations in the telecom sector. Last July, a two-member bench of the tribunal delivered a split verdict on whether operators could provide services in the areas where they don't hold bandwidth. This allowed the department to revive the order.

On March 15, the department asked Bharti, India's largest telecom company by number of subscribers, to stop 3G services in seven services areas and pay a fine of 3.50 billion rupees. A judge of the Delhi High Court stopped the execution of the government order until May 8, but a two-member bench of the same court Thursday lifted that stay.

The three companies together controlled more than half of India's cellular telecom market of 862.62 million subscribers at the end of January, according to data from the telecom regulator. The number of their 3G users wasn't available.

The Idea Cellular executive and the person with knowledge of the development at Vodafone India didn't say what action the companies could take next.

Bharti has approached the Supreme Court Friday following the Delhi High Court's ruling Thursday. The court is scheduled to hear the case Monday.

The telecom department official said the three operators will also have to terminate their network-sharing contracts.

Write to R. Jai Krishna at [e-mail]

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