The department of telecommunication has declared the 3G roaming pacts between telecom operators as illegal.
“The decision has been taken that these services are illegal. The decision to stop roaming services on 3G will be conveyed to the operators soon,” DoT secretary R Chandrashekhar said.
The government has not taken any decision on imposing any penalty, he added.
The stock market reaction was immediate. Companies would now be forced to rework their 3G plans. For subscribers, it would also mean disruption in 3G roaming services.
Reacting to this, at 1.33 pm the shares of Bharti Airtel fell by 4.36% and Idea Cellular down by 4.29%.
Bharti Airtel, Vodafone Essar and Idea Cellular had formed a pact for providing 3G roaming services on a pan-India basis. Other service providers, like Tata Teleservices and Aircel, had also entered into similar agreements to offer 3G services in six circles.
But, the department of telecom ( DoT) believes that the roaming violate license terms and conditions. It also believes that such pacts are financially untenable as they may impact government revenues from spectrum usage charges.
The DoT had, therefore, sought a legal opinion on this matter following which, the law ministry had also supported the DoT's view.
The chiefs of the three leading telecom firms, Bharti Airtel, Idea Cellular and Vodafone, had also sought Prime Minister Manmohan Singh's intervention in the dispute over the 3G roaming pact, failing which they said they would surrender spectrum.
The Prime Minister had assured the industry that the government will look into their concerns and formulate forward-looking policies to sustain growth in the sector.
The telecom ministry had said on December 12 that it will soon take action against service providers that have entered into roaming agreements for 3G services.
In an internal note, the DoT had said the roaming agreement among telecom companies for 3G services would lead to a significant loss of revenue to the government.