India asks Vodafone, Idea to stop 3G pact, imposes fines

NEW DELHI (Reuters) - The 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 the government orders.

The Department of Telecommunications has asked Vodafone India to pay a penalty of 5.5 billion rupees and Idea Cellular to pay about 3 billion rupees, the official said.

Vodafone India and Idea declined to comment.

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 India's 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. The government says such pacts are "illegal".

($1 = 54.8450 rupees)

(Reporting by Devidutta Tripathy; Editing by Anand Basu)