TDSAT split on 3G roaming row, no endgame in sight

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A telecoms tribunal on Tuesday gave a split verdict on a petition by mobile phone operators seeking to overturn a government order that bans them from forming pacts to offer 3G services outside their licensed zones, delaying a resolution to a six-month dispute.

One of the two judges on the tribunal who voted in favour of the carriers said the government may send out fresh notices ordering a halt to the alliances, which mobile phone operators can appeal at a higher court, according to lawyers on the case.

The tribunal's decision was keenly watched by investors in Bharti Airtel, Vodafone's Indian unit and Idea Cellular - the country's top three carriers by revenue - which have effectively extended their 3G services to most parts of the country because of mutual roaming agreements.

The government will take a legal view before deciding on its next move, Telecoms Secretary R. Chandrashekhar said.

Bharti, Vodafone's Indian unit and Idea did not immediately comment. The companies previously said their roaming pacts complied with telecoms licensing rules.

The carriers are allowed to continue their services until the government dispatches a new order, a lawyer on the case said on Tuesday.

Shares in Bharti, India's top mobile phone operator, rose as much as 4 percent, while those in Idea gained up to 5.5 percent.

India raised more than $12 billion from a 3G auction in 2010. No company managed to win airwaves in all of the country's 22 service zones as the bid prices were much higher than expected.

Bharti paid $2.2 billion for 3G bandwidth in 13 service areas, while Vodafone India spent $2.1 billion for permits in nine and Idea gained access to 11 areas for about $1 billion. Many of their service areas overlap.

Last December, the telecoms ministry told them that it was illegal to offer 3G services beyond their allotted zones through mutual pacts and wanted them to stop the services immediately.

In the same month, the carriers, including Tata Teleservices and Aircel, challenged the government order before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which told the government not to take any "coercive" action until it issues a verdict.

NASCENT 3G MARKET

Indian mobile operators launched 3G services just last year and are still expanding their networks.

Of the country's more than 900 million mobile subscribers, only about 15 million are estimated to have subscribed for 3G, which facilitates faster Internet browsing on phones and services such as video calls.

Uptake of the premium services has been slower than expected as a majority of the mobile subscribers mostly use their phones to make calls, and also partly due to the high prices of such services.

Fledgling 3G services currently account for a very small portion of mobile operators' revenue.

The services are expected to account for 5 per cent of revenue by the fiscal year ending March 2014, said a telecoms analyst at a foreign brokerage in Mumbai.

Even if the roaming pacts were ended, companies' revenues will fall by less than 1 percent, said the analyst, who declined to be identified as he was not authorised to speak to the media.

Also, a recent government plan for so-called liberalisation of airwaves would mean carriers can use their current 2G spectrum for 3G services in the future, making the roaming pacts 'redundant,' brokerage ICICI Securities said in a note to clients.