Telcos to take Rs 13,500-cr hit with no roaming charges rule

Last Updated: Tue, Sep 25, 2012 06:13 hrs

In what could be music to the ears of mobile phone subscribers, Telecom Minister Kapil Sibal today said they would not have to pay roaming charges from next year. The move, however, might not go down well with service providers, who will face a hit of up to Rs 13,500 crore in revenues.

At present, GSM operators such as Bharti Airtel, Vodafone and Idea Cellular earn 10-12 per cent of their revenues from the national roaming services, which amount to Rs 10,000-Rs 13,500 crore.

No roaming charge means, from 2013, mobile phone subscribers can use their number seamlessly across the country, without having to pay extra charges while travelling. The policy has already been cleared by the Cabinet as part of the new telecom policy.

For subscribers
According to Romal Shetty, India telecom partner at KPMG, a global consultancy: “It’s a win-win for the subscribers. Earlier, they had to pay for normal call charges for outgoing calls made while roaming, plus the roaming charge of 75 paise to Rs 1 per minute as roaming charge. Moreover, while answering a call on roaming, they were paying up to Rs 1 per minute.”

This will increase the usage of national roaming services by subscribers as they will not have to worry about the high roaming charges, he added.

At present, the average roaming charge is 75 paise per minute to Rs 1 per minute. In any given telecom circle, only seven-eight per cent of all subscribers opt for roaming services.

However, some experts say the abolition of roaming charges could lead to higher call rates, as companies have to compensate for the loss of revenue.

“The balance sheets of the GSM-operators are already strained. If they have to take the additional hit, they will be left with only one lever of — increasing tariffs — to compensate for the losses,” said Ankita Somani, a research analyst with Angel Broking, a brokerage firm.

Already, some operators have increased rates, indicating the current level of rates is not sustainable. However, the industry has to wait for final government guidelines to see by how much rates increase.

For operators
According to the Cellular Operators Association of India (COAI), the industry body representing GSM operators, the loss of revenue could be lower at around Rs 5,000 crore as abolishing roaming would lead to a surge in calls and minutes of usage.

“The incumbent operators could collectively lose Rs 5,000 crore annually if the services are implemented without consultation with all the stakeholders. GSM-operators get 10-12 per cent of their overall revenues from the roaming charges,” said Rajan Mathews, director general of COAI.

“The roaming charges are levied as the current telecom licences are based on circles; operators enter in interconnect agreement to offer seamless service to the subscriber. If roaming is made free, that means operators will now have to absorb this extra cost. This will result in higher tariffs,” Mathews added.

COAI wants the matter to be referred to the sectoral regulator, Telecom Regulatory Authority of India (Trai), for consultation.

“Trai must consult all stakeholders and come out with guidelines on free roaming. Trai is ultimately responsible for setting the tariffs...We hope that Trai will follow due process of consultation paper,” Mathews said.

According to Trai, there are 944.8 million mobile phone users in the country as on July 2012.

More from Sify: