National Roaming To Get Cheaper – A Gala Time For the Telecom Companies In India

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In 2012, Telecom Minister Kapil Sibal announced that, 2013 will be the year of free nationwide Roaming, now it looks, like that dream is progressing. Telecom Regulatory of India (TRAI) announced that the roaming charges are set to fall from July 1, and there will be a new tariff structures for voice calls and SMS.

The Telecom regulator has lowered mobile phone roaming charges by up to 30% from next month and allowed operators to float conditional free roaming plans, offering relief to subscribers as well as some companies that were opposing removal of all charges.

The New Rates

The Outgoing local call charges, while on roaming, will be capped at Rs.1 per minute from Rs 1.40 earlier, while outgoing STD charges, while on national roaming, have been capped to Rs 1.50 from Rs 2.40 per minute earlier.

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The ceiling tariffs for incoming calls, while on national roaming have been reduced from Rs 1.75 per minute to 75 paisa per minute. Outgoing local SMS will cost Rs 1, while outgoing STD SMS will cost Rs 1.50 from July 1. Incoming SMS will remain free of charge.

The Earlier Plan

The government had earlier proposed to completely abolish roaming charges, but the regular said that, mandating a fully free roaming regime is simply not practical at this juncture. Compelling a transition to a fully free national roaming regime would result in telecom service providers not being able to recover their costs from roamers.

The Reason For This Move

The main purpose of the scheme is to abolish all roaming charges and allow mobile phone users to use the same number across the country without having to pay extra charges for services even when they are outside their telecom circle or state. In other words, it is to abolish the national roaming charges in order to move towards One Nation-Free Roaming.

The Possible Effect

This move will significantly bring down the cost of roaming and the competition will reduce the Tariffs. The TRAI chairman Rahul Khullar told the press that, the free roaming regime, will result is cross-subsidization as only 13 percent of the mobile subscribers use roaming facility and telecom companies could recover their cost by the local call charges, and the impact of this move will be reviewed after a year instead of three years.

The Corollary

The shares of Telecom companies are always affected by the decisions made by TRAI.

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Among the individual stocks, Reliance Communications (RCOM) is trading higher by 4 percent to Rs 128, its highest level since January 2011 on BSE.

Idea Cellular (IDEA) is up by 2 percent at Rs 145, extending its 4.4 percent rally in past two days, it is currently trading at six-year high on BSE.

Bharti Airtel (BHARTIARTL) and Tata Teleservices (TTML) (Maharashtra) are trading higher in the range of 1-3 percent at 1046 hours.

As the Telecom partners were going through a rough patch, this new move from TRAI could release their stress, and for the users, their roaming charges would reduce, but there are chances for a hike in their local charges.

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