India’s top mobile operators have cut domestic roaming rates (between operators) by 20-40 per cent following the Telecom Regulatory Authority of India (TRAI) setting new maximum rates effective 1 May.
Bharti Airtel, Vodafone India, Idea Cellular and Reliance Communication said they have cut outgoing calling rates between regions, or circles, by 23 per cent and outgoing local rates (within regions) by 20 per cent. Incoming call rates were reduced 40 per cent.
SMS roaming rates drop by 75 per cent. Local text messages were cut to INR0.25 from INR1.00, while inter-circle rates have dropped to INR0.30 from INR1.50.
Morgan Stanley said the reduction will only have a 2 per cent impact on revenue and 4 per cent impact on EBITDA, the Economic Times reported.
These reductions in roaming rates come amidst widespread talk about the need to boost mobile tariffs to make up for the latest round of investments in spectrum. Outgoing TRAI chairman Rahul Khullar said last month that mobile rates need to increase by 12-15 per cent.
Cellular Operators Association of India director-general Rajan Mathews said that in the longer term tariffs have to increase as the input costs of operators have been rising. He said that rates won’t rise immediately but will take nine months to a year.
However, Telecom secretary Rakesh Garg insisted that the industry, which is benefiting from soaring demand for data and improved spectrum efficiency, has the ability to cope with the “very marginal” cost increases due to their spectrum purchases. He said profits and margins have been rising, particularly for the country’s larger operators.
Barclays noted that the spectrum payments will have a limited impact on operators’ balance sheets in the near term as the payments are on a deferred basis.