Oct 20, 2015 | Source: Moneycontrol.com
According to the new rules imposed by Trai, telecom operators will have to compensate its users by paying Re 1 for every call dropped from January 1, 2016, and limit it to a maximum of three calls dropped per day
The government most definitely won the ongoing tussle with telecom operators, with the telecom regulator Trai terming the services in Delhi and Mumbai unsatisfactory after its audit in the two cities. According to the new rules imposed by Trai, telecom operators will have to compensate its users by paying Re 1 for every call dropped from January 1, 2016, and limit it to a maximum of three calls dropped per day.
According to the government, telecom operators have not managed to keep pace with rising subscriber base in terms of infrastructure, while the operators feel spectrum shortage and the fact that the government over the years has striked down many a towers, terming them to be illegal, has resulted in infrastructural issues. There have also been protests against installation of telecom towers in residential areas on the back of fears of harmful rays. The industry also rubbished the government’s claims of inadequate infrastructual spends.
While operators obviously called foul, analysts too are not sold on the idea of compensating customers. Apart from the cost impact, companies are also worried that such a rule may lead to scuffles or confrontations with subscribers. The Cellular Operators Association of India (COAI) that represents top telcos such as Bharti Airtel and Idea Cellular is planning to take legal recourse if Trai fails to address the concerns of telecom operators.
The issue came to the fore after Prime Minister Narendra Modi apoke about it in August this year while reviewing the various infrastructure bottlenecks in the country and directed DoT officials to fix the problem soon.
But compensating customers is most definitely not the way forward, feel industry experts and analysts. They feel there are a lot of implementation issues.
Terming the rule as good in theory, but not practical , Suresh Mahadevan, MD and Head of Asia Telecom & Media Research at UBS AG, told CNBC-TV18, that in the top 15 cities, there is genuine shortage of spectrum during peak hours.
Also, for call drops when the call is made between two different operators, there will always be a dispute as to which operator is to blame. This opinion is also seconded by many other industry experts. COAI is infact also expects to meet Trai officials next week to discuss these issues.
Mahadevan, however, does not see mobile operators having to raise tariffs to compensate for dropped calls.
According to a report in The Economic Times , maximum outgo for a telco can work out to Rs 93 for every consumer per month, a big hit considering the Rs120-200 average revenue per user (ARPU) that telcos generate per month from voice calls.
Analysts also say TRAI’s missive will 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 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 says a bigger problem is how the regulator will measure dropped calls.
CDMA telecom body AUSPI’s Ashok Sud too agrees 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.
Meanwhile, a Hindustan Times report says a comprehensive solution for call drops lies beyond compensating consumers. “India needs a right mix of policy support and regulation, requisite investment in infrastructure, free-signal boosters and optimum use of spectrum. The operators also have to improve network utilisation. To do all this, they need the support of state governments and local municipal bodies,” the report states. Additionally, it also says, the service-level agreements that operators enter into with managed service providers for setting up networks, erecting towers and putting up boxes to transmit calls must be looked into as they are old and fail to take into account the changes that have taken place in technology and market.
Prior to the implementation of these norms, Trai had come out with a consultation paper, inviting comments from all parties concerned — including the public. Telecom service providers (TSPs) had outlined steps that were already undertaken address the issue. “Clearly, state governments and municipalities have to be approached and dealt with by Department of Telecommunications (DoT), and a common tariff structure for cell towers and right of way organised so that the TSPs don’t fall prey to their machinations. The issue of 24×7 electricity to these towers has also to be addressed. Likewise, the interference from illegal wideband radios have to be stopped, both from within the country and from across the borders,” a Hindu Business Line report says.
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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