NEW DELHI (Reuters) - The telecoms tribunal has overturned a government ban on pacts between carriers that allow them to provide 3G services beyond their licensed zones - a decision that will help the firms expand high-speed data services faster and cut their capital expenditure.
The cost of purchasing 3G airwaves in a 2010 auction was so high that no single carrier won a nationwide permit. Bharti Airtel Ltd (BRTI.NS), Vodafone (VOD.L) and Idea Cellular Ltd (IDEA.NS), currently the country’s top three carriers, entered into pacts with each other to provide 3G services beyond their licensed zones.
The telecoms ministry then banned the pacts, saying they enabled the companies to offer 3G services without buying permits.
The reasoning behind the tribunal’s decision was not immediately known. A detailed judgement is expected later on Tuesday. In 2012, it had given a split verdict on an appeal by the carriers and last year the Supreme Court asked the companies to not add new 3G customers as the case continued.
“We are very pleased with ruling,” said Rajan Mathews, director general of the Cellular Operators Association of India.
“Now that the legal matter has been cleared up, we are hoping that the government will allow us to go forward on this without any appeal to the Supreme Court or anything.”
The telecoms ministry will make a decision on whether to challenge the decision in the Supreme Court after analysing the tribunal’s order, Maneesha Dhir, a lawyer for the government, told Reuters.
India’s telecoms carriers began launching 3G in 2011 and the premium services currently account for about 4 percent of their revenue. But 3G revenue is growing more than 70 percent annually, much faster than the dominant voice services, according to Naveen Kulkarni, a telecoms analyst at PhillipCapital.
“This is a significant long-term positive, helps in faster data growth and also reduces the long-term capex requirement,” he said.
Telecoms stocks showed little reaction to the tribunal’s ruling. Bharti shares were little changed. Idea’s shares were up about 1 percent by 12:37 p.m. in a Mumbai market that was down 0.3 percent.
Reporting by Devidutta Tripathy and Suchitra Mohanty; Editing by Edwina Gibbs