Bharti Said to Have Been Ordered to Stop 3G Services in 7 Areas

Bharti Airtel Ltd. (BHARTI), India’s largest wireless company, has been asked by the government to stop third-generation phone services in seven regions by March 18 for violating its license agreement, two people with direct knowledge of the matter said.

The company has also been ordered to pay 3.5 billion rupees ($64.7 million) for allowing its customers to connect to a rivals network in areas including eastern part of Uttar Pradesh state, said one of the people who didn’t want to be identified before an official announcement. Bharti will appeal the order today in the High Court in New Delhi to seek a stay on the cancellation, the person said.

Bharti, Vodafone Group Plc. (VOD) and Idea (IDEA) Cellular Ltd. entered into agreements after the 3G auction in 2010 that enabled the mobile-phone service providers to offer data services across the world’s seventh-largest landmass instead of operating only in the regions for which they won licenses. Bharti paid 1.6 billion rupees for the right to operate services in Mumbai and Delhi each. That compares with the reserve price of 35 billion rupees for an all-India permit.

The government is acting on the arrangements because it violates the terms of the contract and will likely send notices to Vodafone and Idea as well, one of the people said.

Department of Telecommunications spokeswoman Mamta Verma could not immediately provide details on the notice. Raza Khan, a spokesman for Bharti, declined to comment on the matter.

Rajat Mukherji, a spokesman for Idea, said the company had not received an order from the government regarding cancellation of services. Suresh Rangarajan, a spokesman for Vodafone, did not answer two calls made to his mobile phone.

Bharti shares fell 1.4 percent to close at 310.30 rupees in Mumbai, while S&P BSE Sensex fell 0.7 percent. Idea declined 1.7 percent to 112.20 rupees.

To contact the reporter on this story: Kartikay Mehrotra in New Delhi at kmehrotra2@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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