Oct 16, 2015 | Moneycontrol.com
Telcos will have to compensate Re 1 for each call dropped. The TRAI said the upper limit for call drop compensation will be capped at three per day per user.
Moneycontrol Bureau
The Telecom Regulatory Authority of India (TRAI) today decided to crack the whip on telecom companies, and asked them to start compensating for call drops from January 1, 2016.
Telcos will have to compensate Re 1 for each call dropped. The TRAI said the upper limit for call drop compensation will be capped at three per day per user.
Telcos would have to send an SMS to a user within four hours of a call drop intimating him about the credit. Postpaid users will get to see details of the compensation in the montly bills.
The issue of call drops has gathered momentum recently with TRAI asking telcos to improve service standards, while the latter say limited availability of spectrum and towers hamper their ability to offer better connectivity.
The regulatory body considers a benchmark rate of 2 percent and 3 percent (worst affected cell) as a call drop rate threshold for each telecom service provider in each circle and publishes data in the quality of service chapter of the sector’s quarterly performance report.
Shares of Bharti Airtel and Idea Cellular dropped 2.3 percent and 2.6 percent after the news came out.
Analysts said TRAI’s missive would hit profitability of telecom companies as the maximum allowed compensation of Rs 90 per user per month was almost at the lower end of the monthly average revenue per user (ARPU) they make from voice services they offer.
“This is pretty significant and more than we were expecting. It will have a major impact on ARPUs and telcos will take it seriously,” telecom analyst Kunal Bajaj told CNBC-TV18.
Bajaj added that bigger problem is how the regulator will measure dropped calls.
CDMA telecom body AUSPI’s Ashok Sud agreed with this, saying that even as measuring dropped calls will be a technical challenge, there will always be some amount of dropped calls on a mobile network.
“The regulator itself defines the limit of normal level of dropped calls at 2 percent. A charge should be levied only if the number of dropped calls crosses this threshold,” he said.
He said telcos will come together and discuss whether they want to contest the ruling.
For entire interview, watch accompanying video.
Bharti Airtel stock price
On October 26, 2015, at 15:43 hrs Bharti Airtel was quoting at Rs 351.90, down Rs 6.85, or 1.91 percent. The 52-week high of the share was Rs 452.45 and the 52-week low was Rs 315.65.
The company’s trailing 12-month (TTM) EPS was at Rs 32.61 per share as per the quarter ended June 2015. The stock’s price-to-earnings (P/E) ratio was 10.79. The latest book value of the company is Rs 195.80 per share. At current value, the price-to-book value of the company is 1.80.
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