DoT asks Bharti to stop 3G services in 7 circles

The department of telecommunications (DoT) on Friday asked Bharti Airtel to stop 3G services within three days in the seven circles it does not have the required licences.

Bharti had filed a petition against the decision in the Delhi high court. The hearing is scheduled on Monday.

Bharti was offering these services in seven circles, where it does not have 3G spectrum, by signing intra-circle agreements with Vodafone and Idea Cellular. Bharti has also been asked to pay a penalty of Rs 50 crore per circle.

The seven circles are Haryana, Maharashtra, UP (East), Kolkata, Gujarat, Kerala and Madhya Pradesh

Bharti has 6.8 million 3G customers across the country (5.2 million are active). Industry experts said about 30 per cent of these subscribers might be impacted.

The telecom company offers 3G services in 13 more circles, where it has bought spectrum in the 3G auction. Subscribers in these circles will not be hit by the order.

The company declined to comment on the notice. Vodafone India said it had not received any notice. Idea Cellular already has a stay from the Delhi High Court against the stopping of 3G services through the  intra-circle agreements.

The composite notice to Bharti has directed the telco to stop the provisioning and selling of 3G services to existing and new customers within these seven circles, and to provide confirmation of having stopped the service to DoT within three days.

The three telcos together have 12 million 3G subscribers. Of these, according to estimates, 30 per cent are in circles where the operator concerned does not have 3G spectrum.

Idea Cellular has 2.8 million 3G customers and Vodafone has 2.5 million.

Experts said as the 3G business was still small, the move might not impact the companies’ overall businesses. “This issue of cancellation of 3G services in roaming areas has been factored in,” said Sushil Sharma, senior research analyst, BRICS Securities. “The 3G business is very small and it will have no impact on the stocks.”

But Bharti Airtel fell 1.2 per cent to close at Rs 311 a share in today’s trade on the Bombay Stock Exchange. Idea Cellular's stock dropped 1.7 per cent to close at Rs 112 a share.

Bharti had won spectrum in 13 circles, spending as much Rs 12,295 crore, by aggressive bidding at the 3G spectrum auctions. As no operator could get a pan-India licence, the top three operators — Bharti Airtel, Vodafone India and Idea Cellular — had signed pacts sharing 3G spectrum and offering services across each others’ circles. Vodafone India has 3G spectrum in nine circles and Idea has these in 11.

THE STORY SO FAR
Sep 2011: DoT asks Bharti Airtel, Vodafone and Idea Cellular to refrain from offering 3G services in circles where they do not have spectrum
Dec 2011:  DoT sends order asking them to stop 3G services using intra-cirlce agreements immediately
Jan 2012: Telcos appeal against DoT in the telecom tribunal, TDSAT
APRIL 2012: TDSAT gives split verdict. Chairman allows operators while member dismisses it
Sep 2012: Showcause notices sent to companies by DoT, levies Rs 50 crore per circle as penalty
Oct 2012: Bharti Airtel moves Delhi High Court against the notice
Nov 2012: Delhi High Court asks DoT to take the operators’ views and re-examine the matter. DoT forms a committee to look into the issue
Dec 2012 : DoT sends similar notices to Vodafone India and Idea Cellular
Feb 2012: The committee’s recommendations reiterate DoT’s earlier stand
March 2013: DoT introduces clause in the letter of intent saying 3G services on intra-circle agreements is not possible
March 2013: Delhi HC stays DoT's rule on intra-cirlce  agreements , based on a plea by Idea Cellular
MARCH 2013: Bharti gets DoT order asking them to stop intra-cirlce  agreements