Bharti Airtel, Idea Cellular, Vodafone shares up on 3G ban stay order

MUMBAI: Dalal Street cheered an Indian Court's decision to stay the ban on telecom operators' Bharti Airtel, Vodafone and Idea Cellular pact to share third generation, or 3G, airwaves, as shares of the listed entities rose more than 4% each on Monday.

The speed with which the Tribunal has granted a stay order gives hope that operators may be able to continue services and retain fees they have already charged some subscribers, said analysts.

Bharti shares ended the day at 344.70 a piece and Idea Cellular at 82.30.

Operators had sought a special hearing at the Telecom Disputes Settlement and Appellate Tribunal, or TDSAT, on Friday after the Department of Telecommunications asked companies to discontinue agreements within 24 hours.

The industry had slammed the government move, accusing it of reneging on promises with "retrograde", "irrational" and "illegal" decisions.

The tribunal will hear the matter further on January 3, 2012.

Bharti, Idea, Vodafone, Tata Teleservices and Aircel, entered into 3G roaming deals, enabling them to sign up 3G customers across the country even in areas where they did not have third-generation airwaves. These pacts allowed them to use each others' airwaves and offer 3G services such as video calling and high-speed internet on phones across the country.

None of the telecom companies could acquire pan-India permits in the auction held last year. The private sector cumulatively paid the government 51,000 crore for 3G airwaves.

The operators declined to comment any further on the matter at it is subjudice.

The industry has maintained the DoT had clarified before the 3G airwave auction that such pacts would be allowed, under the unified access license. Part of the reason operators bid as high for the licence was the hope that they would be able to fully utilise it, even if they did not have sufficient number of consumers on their own network.

However, an alternate legal opinion is that such pacts for second generation, or 2G, networks were only allowed for areas where operators had licensed airwaves but preferred to share infrastructure to limit capital costs.

"There is no reason for an operator to get a license across India if it can acquire it in one circle (service area) and piggy-back on other operators elsewhere," said an industry expert, asking not to be named.

In any case, the New Telecom Policy that is expected in the first quarter of 2012 will supposedly resolve all such issues as it proposes to permit spectrum trading. Whether the policy will precede a court decision on the matter rests to be seen.