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Roaming deals unlikely to put telcos in a spin

Rajesh Kurup
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Most operators offer free incoming at Rs 5 per day, while some have launched one-time packs with 30-day validity.

With just 13 per cent of the total mobile subscribers using roaming services, the recent rollout of free incoming schemes is unlikely to impact the operators’ margins.

However, the industry expects these schemes to bring in greater ‘customer connect’.

“We have not seen any reduction or increase in usage patterns as part of these schemes, even though it is a bit early to comment. We will look at a minimum of 60 days usage to gauge the impact,” Rajan S. Mathews, Director-General at GSM operators’ body Cellular Operators’ Association of India (COAI), said.

Earlier this month, Bharti Airtel, Vodafone India and Idea Cellular began offering free incoming roaming services, towing in line with a regulatory order. While State-owned Bharat Sanchar Nigam Ltd (BSNL) joined the bandwagon later, Loop Mobile (with operations only in Mumbai circle) became the latest to launch the services.

Most operators offer free incoming at Rs 5 per day, while some have launched one-time packs with 30-day validity.

For a fixed fee

“There will not be any significant impact on operators, and any potential impact this would have caused has been offset by the upfront fee. It’s not going to erode margins,” Kamlesh Bhatia, Research Director at Gartner, said.

In its June 17 order, Telecom Regulatory Authority of India (TRAI) permitted free roaming across the country, on condition that users pay a fixed fee. TRAI, however, ruled out making roaming completely free.

The regulator also mandated lower caps to roaming tariffs, resulting in a reduction of about 29-57 per cent across the board. According to Jaideep Ghosh, Partner-Telecom, KPMG in India, the possible abolishment of roaming charges was a major regulatory overhang on the industry, with significant implications on the incumbents’ revenues. “TRAI order could temporarily alleviate these concerns,” he said, adding that the listed incumbents (Bharti Airtel and Idea Cellular) are unlikely to be materially affected as their rates are already in line with the prescribed rates.

According to TRAI, about 13 per cent of subscribers use roaming services, contributing about 8.8 per cent of the GSM operators’ total mobile revenues.

NO MORE ‘BILL SHOCKS’

These schemes bring in customer connect and retention benefits.

“This also addresses what the industry calls the ‘bill shock’. Now they can manage their bills while roaming, or at least are aware that they are paying an additional Rs 5 per day while on roaming,” Gartner’s Bhatia added.

According to Mathews, these provide choice between the new cap and or the upfront fee offerings. The operators are opting for wait ‘n watch approach.

rajesh.kurup@thehindu.co.in

(This article was published on July 17, 2013)
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