Vodafone, Idea asked to stop 3G agreement

Telecommunications ministry has asked Vodafone Group Plc's local unit and Idea Cellular to stop 3G services outside their licensed zones and imposed penalty on both carriers, a senior government official said, in a dispute that has dragged on for more than a year.

The orders follow a similar directive to top mobile phone carrier Bharti Airtel Ltd last month, which the company is fighting in courts. Vodafone and Idea are also expected to challenge government orders.

The Department of Telecommunications has asked Vodafone India to pay a penalty of Rs 5.5 billion($100 million) and Idea Cellular to pay about Rs 3 billion, the official said. The dispute over 3G pacts is one of several regulatory challenges hurting carriers in the world's second-biggest mobile phone market.

In a 2010 auction, no single carrier managed to win 3G airwaves for all of 22 telecommunication zones as bid prices were far higher than expected. Bharti, Vodafone and Idea provide 3G services beyond their licensed zones through pacts with each other.

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