The Telecom Ministry is likely to cancel the licences of leading mobile operator Idea Cellular and Spice in five states for failing to roll out services within the stipulated time.

Telecom regulator Trai has recommended to the Department of Telecom (DoT) to cancel the licences of Idea in Karnataka and Punjab circles and that of Spice in Maharashtra, Haryana and Andhra Pradesh.

According a DoT note, "As per Trai's recommendation, as on date (December 22, 2010) these licencees are in violation of terms and conditions pertaining to roll-out obligations,".

It said meanwhile that since the spectrum (radio waves) to Spice has not been allocated in Delhi, it did not violate the service roll-out norms for this circle.

In 2008, Idea bought Spice but has not yet received the approval from DoT to go ahead with the merger.

However, as per Trai, since no explicit approval has been received from DoT till date for the merger of the licences of the two companies for six service areas -- in which they were competitors -- it is obligatory for both of them to individually comply with the licensing rules.

"Trai has mentioned that since no explicit approval has been received from DoT till date for merger of licenses of Idea and Spice for six overlapping service areas, it is obligatory for both of these licencees to comply individually with licensing terms and conditions pertaining to roll-out obligations," said the DoT note.

However, Aditya Birla group firm Idea maintains that it has not breached the licence agreement.

Meanwhile, DoT is believed to have accepted the recommendations of Additional Solicitor General Amarjit Singh Chandhiok to impose a Rs 300-crore penalty on Idea Cellular for holding more than 10 per cent stake in two mobile companies in the six telecom circles, in violation of existing norms. They are -- Karnataka, Punjab, Maharashtra, Haryana, Andhra Pradesh and Delhi.

On April 1, DoT had secured an ex-parte stay from the Delhi High Court on merger between Idea and Spice, a decision which the Aditya Birla group firm has said it will oppose, charging that DoT was trying to cover its "inefficiencies".