Reliance Communications said it was surprised and disappointed by TRAI's announcement , and that roaming charges should have been completely done away with.
Breaking ranks with the industry, Anil Ambani-promoted Reliance Communications has criticized Telecom Regulatory Authority of India’s (TRAI) decision allowing carriers to offer nationwide mobile roaming to subscribers for a fixed fee from July 1, and capping roaming call charges.
"We are surprised and disappointed by TRAI's announcement of only a reduction and some adjustments in national roaming charges, which leaves a lot to be desired. Roaming charges should have been completely done away with, which is what Reliance Communications has been advocating for a long time now," said a release by Reliance Communications.
Earlier this year, government had proposed to completely abolish roaming charges, but the TRAI viewed it as not "practicable at this juncture."
Most telecom operators were opposed to a total abolition of roaming charges as they felt it would hurt their revenues.
In a move that cushion telcos' losses, TRAI has reduced the cap on mobile rates for users outside their local area by roughly 30-60 percent, and fixed a ceiling on outbound SMSes.
The cap on outgoing local calls and STD calls while on roaming have been set at Rs 1 (Rs 1.40 earlier) and Rs 1.50 (Rs 2.40) per minute respectively, and incoming calls will be charged at Rs 0.75 (Rs 1.75) per minute. Outgoing local SMS will be charged Rs 1 and outgoing STD SMS will be charged Rs 1.50.
Reliance Communications disputes the contention that free roaming would hurt the telecom operators revenues.
"We do not agree with the views expressed by certain operators that free roaming would adversely impact revenues. Instead, the growth of business would be rewarding for service providers, as has been seen and confirmed from the international experience," said the Reliance Communications statement.
Telecom operators have the option of either charging a fixed upfront charge for roaming or charging on the basis of the TRAI-approved charges.
Brokerage house Kotak Securities has said the impact of the revised roaming rates on the financials of telecom carriers would be minimal.
"After all the noise around a move towards free roaming and one-India, one-rate regulatory regime in the past year or so, the final outcome of the TRAI's regulatory process on this issue is clearly fairly benign for the industry, especially the incumbents (who have a higher proportion of their revenues coming from roaming than challengers)," said the Kotak note.
"More importantly, the new ceilings are well above the current blended realizations on various types of calls (local/STD outgoing, incoming) and SMSs (local/STD outgoing)," the note said.
Watch the attached videos to view the interaction with Gurdeep Singh, president & chief executive officer -wireless business, Reliance Communications.
Reliance Comm stock price
On September 17, 2014, Reliance Communications closed at Rs 102.60, down Rs 4.3, or 4.02 percent. The 52-week high of the share was Rs 164.45 and the 52-week low was Rs 99.35.
The company's trailing 12-month (TTM) EPS was at Rs 1.76 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 58.3. The latest book value of the company is Rs 131.37 per share. At current value, the price-to-book value of the company is 0.78.
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