Free roaming in India – Full of hidden Opportunities


Post NTP-12 policy approval, there are round of assessments regarding the impact of One License-One Geography on the potential revenue stream of mobile operators and its spill overs on the ecosystem players. Regulators are pushing to the limit to make sure that the intended policy comes into force by March 2013 which seems little difficult. The GSM association is raising concerns about the impact on revenue and job losses. One of the CDMA operator welcome the move and sees opportunities around it.

I see huge benefits for Telecom industry ecosystem players’ barring the OEM’s involved in roaming related product or service offerings.

According to TRAI documents, the GSM and CDMA operators are generating 8.5% and 3.9% roaming revenue out of total mobility revenue and it is decreasing every quarter. On a consolidated basis, roaming revenue contribute around 7% of the total mobility revenue which translate to $2.25Bn. At high level, it looks like that it would have major impact on mobile operator revenue stream, EBITA and EBIT level. It is true that it would impact OEM’s offering roaming product or services to mobile operators on network utilization and revenue share model.

According to reports, around 10% of the total mobile subscriber base contributes to roaming revenue. It is also noteworthy that there are around 71 Mn subscribers carry more than one SIM’s. The voice usage pattern of frequent travellers in India is to use local SIM to bypass high roaming charges.

In the recent quarter, mobile operators raised tariff by 20% in some circles. They also indicated that the cost structures of offered triple play services are still very high and would be forced to increase tariff in coming quarters to be able to sustain.

In case of free national roaming under one license, one geography regime, it is widely expected that mobile operators is going to increase the tariff again. The recent tariff front initiatives by mobile operators would be beneficiary to wireless ecosystem players

The tariff would be raised for on the pretext of roaming charging abolishment and would be applicable to all user bases. The tariff uniformity across service geography is going to be positive for mobile operators as against current scenario of different price point for different circle based on the user paying capacity.

In my point of view, Metro applicable voice price point would be enforced across the service geography. It is going to increase voice realised revenue per minute for most of the mobile operators. The network MoU per subscriber is going to witness healthy growth as it is going to remove the user mental block of different tariff points.

The price points for data and MVAS would be kept same across service geography. It would have direct positive impact on MVAS ARPU. The MVAS APRU is going to increase from current $1.98 per active subscribers. The negative growth factor inflicted due to MVAS regulation might see a reversal with rise in MVAS price points even with reduced level of active MVAS userbase. It is also expected that carriage charges go down drastically as the carriage cost would be based on bandwidth centric rather than content centric as per the NTP-12. It will have direct positive impact on content price points and subsequently usage.  On higher realisation of revenue the revenue realization of MVAS provider is going to be higher. It would enable higher data, MVAS user adoption, usage.

On the data adoption level, it is widely expected that license service area would carry same tariff points and would trigger huge growth in data segment, revenue realization and higher share of data revenue out of total mobility revenue.

The most probable above mentioned dynamics is going to trigger higher revenue realization potential across userbase and technology upgrade from segregated service delivery to centralized service delivery mechanism. It would create millions of $ opportunity for technology enabler for network upgrade.

In my point of view, the upcoming revenue opportunity through one license-one geography across services would be much higher than the lost revenue from abolishment of roaming revenue. The government is going to get the higher revenue realization through multiple charges and tax which accounts for 35% of Gross revenue.

The struggling MVS ecosystem players are going to experience growth moving forward.

In conclusion, it is very good opportunity for mobile operators to mitigate any tariff wars and increase revenue across triple play service and products. The clarity on Unified licensing regime is going to define and refine wireless ecosystem segment. It is going to be positive EBITA contributory for wireless sector. It would be interesting to see how Tier2/tier3 mobile operators position themselves given the attached legal, financial issues with them. The challenging regulatory directives can be easily played out to create business opposition. We just need an eye to catch it.

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