Roaming goes free in all-out telco war

Largest telecom service provider Bharti Airtel’s move on Monday to end domestic roaming charges for calls and data to counter Reliance Jio Infocomms’ similar offer is a trade-off between cost of losing customers and loss of roaming revenues, and will help it arrest porting by its users to rivals.

Analysts said in the trade-off between the two, the telecom companies would gain by letting go of roaming revenues, which was currently at a low single- digit level of their total revenues.

G Krishna Kumar, Bengaluru-based telecom expert, said giving up roaming revenues was a small cost that Airtel was paying to retain its customers. “The average roaming revenue as per Trai (Telecom Regulatory Authority of India) report is about 4.6% of the total revenues, but the cost of losing customers (to other operators) is significant. It is a good move by Airtel, and its customers will also be happy now,” he said.

Krishna Kumar expects free roaming to hit telcos’ average revenue per users (Arpus) in the short term but over the long run, when they regain pricing power, it will be beneficial to them.  

“The good thing is that free roaming will increase the usage of call and data services of telcos. Therefore, Arpus may go down a tad bit (in near term) but once people use more and more (of it) then it (Arpus) could pick up, and over time it may improve once they (telcos) have the pricing power,” he said.

An industry insider told DNA Money he expected other players such as Vodafone, Idea, Telenor, Reliance Communications and others to follow suit.

“This (free roaming) is something that needs to be looked at from business stand point. I’m sure we will be looking at it and when we have to make our announcement we will do so. We haven’t taken a call on it yet,” he said.  He alluded to roaming revenues being a “nominal” portion of telcos’ total income from telecom services. “I wouldn’t say it is a small percentage. It is a nominal percentage. You must understand that in this kind of situation (intense tariff battle), where realised rates are being hammered down, any revenue stream is an important revenue stream,” said the senior executive of a leading telecom services operator.

Krishna Kumar said telecom tariff structure in India was going the US way, which had single telecom rates across its telecom metropolitan statistical area (MSA) and no roaming charges. “It’s one big circle (in the US), and India is becoming like the US in terms of having one MSA. That’s also the right way to go,” said the telecom expert.

Announcing that it had declared a “war on  roaming”, Airtel on Monday said incoming calls and data across India  would be free and there would be no premiumgoing roaming services from  April 1.

It also said there would be “no bill shocks” on  international roaming; “daily billing will be automatically adjusted to  the price of basic one-day pack even for customers who don’t buy a  roaming pack”.

“This marks the death of national roaming and the  whole country will now be like a local network for our customers, who  will not have to think twice before making or receiving calls or using  data while traveling outside their home base,” said Gopal Vittal,  managing director & CEO (India & South Asia), Bharti Airtel, in a  statement issued by the company.