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: Tariff wars in the Indian telecom sector are now taking new shapes. In fact, they are entering a new territory. So far restricted to voice call rates such as per second billing, telecom operators are in an overdrive to reduce tariffs on roaming and SMS charges as well. The idea is to reduce customer churn and maintain their market share. The recent move by Bharti Airtel and Tata Docomo to slash roaming rates are pointers to the new tariff wars in the making. While Airtel has reduced the roaming charges by almost 60%, Tata Docomo has extended it’s per second billing mechanism to roaming.
As number portability threatens to increase churn, telecom operators are innovating on the tariff front. Telecom experts say that roaming revenue comprises around 10-12% of an operators’ earnings. Ramesh Menon, CEO, mobility, Mumbai, Maharashtra and Goa, Bharti Airtel says, “36% of 115 million customers travel on the Airtel network. Research has shown that customers need benefits while traveling and are not satisfied with just local calling benefits. You would notice that most of the intra or inter city or regular outstation travelers are shy of talking on the phone.”
It is pertinent to note that Airtel’s premium tariffs on roaming services were reduced in order to retain its higher end subscribers and prevent churn. As per a report by HSBC Securities, premium tariffs on roaming services for Bharti accounted for almost 15% of prepaid revenues and about 20% of post-paid revenues. “We expect the disruption to continue for some moretime, as new entrants like Etisalat and Telenor are yet to launch services. This phenomenon will only add to pricing pressures and aggravate investor concerns on industry fragmentation. We view sector consolidation, 3G services, and market-linked 2G spectrum policy as the swing factor for the stock,” the report adds.
Nevertheless with intense competition, the telecom operators are forced to cut down their roaming charges, which according to the experts, will impact and lead to a decline in their roaming revenues by 6%. Abraham Punnoose, vice-president, marketing and business development, Roamware says, “Given that many of the Indian operators have pan-India presence, this revenue could be across circles within India and in some cases like loop telecom and the new licensees (limited coverage) would be from roaming into the other networks within India.” Elaborating on his point he adds, “Given that national roaming rates were already in the Rs...
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