The circles affected by the Supreme Court order are Kolkata, Maharashtra, Gujarat, Haryana, UP East, Kerala and Madhya Pradesh.
Airtel can, however, continue 3G services in these seven zones for its existing customers, the court said, after hearing an appeal by India's largest telecom carrier against a government ban on its 3G pacts with other mobile service providers.
The company has pleaded in court that over 20 million subscribers will be affected if it terminates its roaming pacts.
Bharti, Vodafone India and Idea Cellular currently offer 3G services outside their licensed zones through agreements with each other as no carrier had managed to win airwaves for all 22 circles in India in a 2010 auction.
The agreement allows these companies to offer 3G data services to their customers beyond their licensed zones or circles. For example, Airtel, which does not have a license for the Kolkata circle, is able to provide 3G data coverage to its subscribers there because of a pact with a carrier that has a licence for Kolkata.
The government says this is illegal. The Department of Telecommunications, or DoT, had in December warned these service providers to immediately stop functioning under the 3G pacts. All the companies have appealed against this order.
Reliance Communications, which does not participate in the 3G pacts, has opposed Bharti in court, alleging that the company is selling SIM cards illegally in the seven circles where it does not own spectrum. Reliance has pleaded in court that it has "paid thousands of crores for the 3G spectrum and Bharti is using it for free in as many as seven circles, therefore, disrupting the level-playing field. If this is allowed, then there is no requirement for any licensee to participate and purchase 3G spectrum in auction. This defeats the purpose of auction".
In its order today, the Supreme Court has also asked the DoT not to take any coercive steps against Bharti on a Rs 350 crore penalty - Rs 50 crore for each of the seven circles - that it imposed on the telco in March for allegedly violating license terms and conditions.
Bharti Airtel had won 3G spectrum in 13 out of 22 telecom circles in the 2010 auction.
Bharti Airtel shares extended losses after the court ruling today. The stock traded 3 per cent lower at Rs 273 on the National Stock Exchange as of 1.10 p.m. Bharti Airtel was also the top loser on the 50-share Nifty.