India's telecommunications market, the world's second-biggest by number of users, has been hit by regulatory uncertainties recently, including a Supreme Court order to cancel 2G cellular permits awarded in a scandal-tainted 2008 sale. Affected carriers will have to buy airwaves in an auction scheduled for November.
The latest move comes after the government said in December that it was illegal to offer 3G data services beyond their allotted zones. The carriers challenged the government order before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which in July gave a split verdict.
Telecommunications officials will likely on Friday send "show cause notices as well as an advisory to stop (3G) services" through such pacts to companies, said R. Chandrashekhar, the secretary of the Department of Telecommunications, which is part of the Ministry of Communications and Information Technology. In effect, he is India's top bureaucrat in the telecommunications ministry.
Although companies have 60 days to respond to the notice asking why action should not be taken against them for violating the rules, they will have to stop services immediately, he added.
The government sold 3G airwaves in a 2010 auction that attracted much higher bids than initially expected and no single company managed to get spectrum in all of the country's 22 zones.
Leading mobile operators Bharti Airtel Ltd (BRTI.NS), Vodafone Group Plc's (VOD.L) India unit and Idea Cellular Ltd (IDEA.NS) currently provide 3G services beyond their licensed zones through pacts between themselves.
Uptake of 3G 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.
Of India's more than 900 million mobile connections, about 50 million are 3G subscribers and not all who have 3G use the premium services regularly. The services currently account for a very small portion of mobile operators' revenues.
Bharti and Vodafone India officials declined immediate comment on Friday, while Idea officials were not available.
Shares in mobile phone carriers were trading mixed in a strong Mumbai market. Bharti Airtel gained 1.6 percent, while Idea Cellular was down 0.8 percent at 12 p.m. in a Mumbai market that was up 1.4 percent.
