Free roaming to cause Rs 13,500 crore revenue loss to mobile service providers

Telecom Lead India: Revenue loss to mobile service providers due to free roaming in 2013 will be around Rs 13,500 crore.

Domestic mobile operators such as Bharti Airtel, Vodafone and Idea Cellular generate 10-12 percent of their revenues from the national roaming services, which amount to Rs 10,000-Rs 13,500 crore.

Free roaming, as per National Telecom Policy 2012, enables mobile phone subscribers to use their number seamlessly across the country, without paying extra charges while travelling.

Recently, Indian telecom ministry Kapil Sibal said free roaming will be allowed in 2013. This will benefit 944.8 million mobile phone users in the country as on July 2012.

“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,” Romal Shetty, India telecom partner at KPMG told Business Standard.

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.

Operators will be happy if they increase the per minute usage.

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.

According to Business Standard, 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.

Recently, Reliance Communications and Idea Cellular have increased mobile tariffs since they are unable to meet revenue targets and profitability due to increase in operational costs.

After the spectrum auction, Indian telecom service providers will go for one more round of mobile tariff hike since there will be less competition. Hence, there will be less pressure from revenue loss from abolition of roaming fee.

“In the light of the Government’s policy on keeping tariffs constant across India, operator revenues are bound to be hit in the short term. While some of the impact could be minimized by increased usage of services, additional initiatives need to be looked at, to shore up revenues and profitability. Operators should look forward to the international roaming segment which is a growth area with over 15 million outbound travelers from India and around 8 million inbound travelers,” said VVR Kishore, vice president, Engineering and head – India Operations, Roamware.

VVR Kishore







“Currently in this segment, operators have numerous substitute players like travel SIM card vendors, VoIP vendors and over the top (OTT) applications to contend with. They can gain a large share of revenue with innovative outbound and inbound roaming vas products that are competitively priced. They should also focus on customer experience management initiatives for this niche, high value segment,” Kishore added.

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 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,” said Rajan Mathews, director general of COAI.

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