Latest Trai move could hit telcos’ revenues
Even as the Telecom Regulatory Authority of India (Trai) and the department of telecommunications (DoT) squabble over the possible tariff hike post the spectrum auctions, the regulator on Thursday slashed national roaming call charges by up to 23% and SMSes by around 75%. The move, while being good for consumers, reduces the elbow room available before the industry to raise tariffs to recoup its high bidding amount.
The reduction in roaming charges, which becomes applicable from May 1, comes as the Trai has notified downwards the current ceiling on the roaming charges. With this, it has completed the exercise it undertook recently by revising downward the termination charges and carriage charges. Since the cost of the operators would come down, so it has seen reduction in roaming rates as the logical next step.
However, for operators who have in aggregate bid over R1.1 lakh crore in the recent spectrum auctions, of which they have to make an upfront payment of R28,000 crore, the move could see a hit in their revenues. Currently, the annual mobile revenues of the industry stands at around R1 lakh crore and national roaming contributes around 5-6% to it, which is likely to get hit.
Articulating the apprehension, Hemant Joshi, partner, Deloitte Haskins & Sells, said, “These ceiling tariffs are good for the consumer but would impact the profitability of telcos given the high price they have to pay for spectrum and other high costs of new technology roll out and government levies. Revenue from SMS was reducing anyway due to OTT messenger apps and these new ceilings would further hit the telcos revenue from roaming SMS. This will bring into focus the debate on net neutrality.”
Under the new regime, the maximum or ceiling rate that an operator can charge for STD calls on roaming has come down to R1.15 per minute from R1.5. Similarly, national SMS rate has been reduced to 38 paise, from R1.5 per SMS. Also, an operator can charge a maximum 25 paise for each local SMS instead of the current R1 per SMS. An operator can charge a maximum 80 paise per minute for a local call instead of R1 permitted at present.
For incoming calls during roaming, a mobile customer will be required to pay a maximum of 45 paise only per minute instead of 75 paise now.
However, in some relief to the operators, the regulator has done away with its earlier approved roaming tariff plan, RTP and RTP-FR, under which the consumer paid the same charges as his home circle or service area while in roaming. Instead, the Trai has now allowed operators to introduce a new special roaming tariff plan, which will offer only free incoming calls on payment of a fixed charge, but do away with other features.
Roaming charges were last reviewed in September 2013.