Telcos may suffer Rs. 13,500 crore loss due to abolition of roaming charges

By Kul Bhushan | Updated 25 Sept 2012
Telcos may suffer Rs. 13,500 crore loss due to abolition of roaming charges

Communication and IT Minister Kapil Sibal recently said that the mobile phone users will not have to pay the roaming charges from the next year, as proposed in the National Telecom Policy 2012. Even as the removal of roaming charges is going to benefit million of mobile phones users in India, the move is going put extra pressure on the telecom operators, which as per an estimate are likely to face a loss up to Rs 13,500 crore in revenues. Moreover, the telecom operators may end up of raising local tariffs to make up the for the loss.

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According to a Business Standard report, GSM operators such as Bharti Airtel, Vodafone and Idea Cellular make 10-12 percent of their revenues from roaming services, which is around Rs 10,000-Rs 13,500 crore. The Cellular Operators Association of India (COAI), the industry body that represents the GSM operators of the country, says the projected loss in revenue could be lesser at around Rs. 5,000 crore, as abolishing roaming would prompt a hike calls and minutes of usage.

“The incumbent operators could collectively lose Rs 5,000 crore annually if the services are implemented without consultation with all the stakeholders. GSM-operators get 10-12 per cent of their overall revenues from the roaming charges,” said Rajan Mathews, director general of COAI.

“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,” Mathews added.

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Other experts are also of the view that the telecom companies may raise tariff to compensate the loss occurred due to abolition of roaming charges. Over the weekend, Reliance Communications (RCom) announced a hike of 25 percent in call tariffs for all zones, to improve its operating margins. The move, however, is likely to set the stage for other telecom operators to hike tariff, especially after the abolition of roaming charges.

Do you think telecom operators should hike tariffs to compensate the possible loss due to abolition of roaming charges? Let us know in the comments below:

Source: Business Standard

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