Trai rule on tariff offers could cost telcos Rs 10-12,000 crore

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New Delhi | Published: April 3, 2018 5:40:08 AM

The Trai regulation that telcos can no longer make an offer to select clients — segmented offers, in jargon — but have to extend them to all subscribers could potentially cost the industry Rs 10,000-12,000 crore in a year.

Trai, Telecom Regulatory Authority of India, reliance jioAs per Trai, the offers made to 60-72 million people have to be made to all existing subscribers. (PTI)

The Telecom Regulatory Authority of India’s (Trai) regulation that telcos can no longer make an offer to select clients — segmented offers, in jargon — but have to extend them to all subscribers could potentially cost the industry Rs 10,000-12,000 crore in a year.

Right now, when a subscriber threatens to move to another telco — port, in jargon — the original telco offers to match, even better the offer being made. There’s no firm data on how many segmented offers have been made by various telcos, but the number of porting requests can be used as a proxy. Around 5-6 million porting requests were made every month over the last year, though the number went up to around 10 million in October 2017 to January 2018.

As per Trai, the offers made to 60-72 million people have to be made to all existing subscribers. Since that won’t apply to RJio — it is in response to RJio’s tariffs that subscribers are threatening to port, mostly — this means the segmented offers have to be extended to another 650 million or so. If the offer results in tariffs falling by even Rs 15 per month, that’s an additional loss of Rs 11,700 crore in revenues every year.

Coming as it does on top of a big hit that telecom revenues have taken since RJio began operations, it will be a while till industry revenues stabilise. The latest report on telecom by Kotak Institutional Equities (see graphic) in fact estimates that Bharti Airtel will end Q4FY18 with a pre-tax loss of Rs 379 crore, after a pre-tax profit of rs 613 crore in Q3.

While Kotak estimates Bharti Airtel’s Q4 revenues will fall to Rs 19,615 crore as compared to Rs 20,319 crore in Q3, those for Idea will fall to Rs 6,124 crore from Rs 6,510 crore and its pre-tax losses will rise to rs 2,466 crore from Rs 2,067 crore in Q3.

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