Airtel, Vodafone And Idea Set For Bonanza On Intra-circle Roaming

Bharti Airtel, Vodafone India and Idea Cellular are all set to make huge gains from third-generation intra-circle roaming services, which these firms are offering again. The network sharing will enable them to move comfortably towards acquiring expensive spectrum and minimise capital and operational expenses, analysts say.

In April, a tribunal had set aside an order by the Department of Telecommunications (DoT), restricting these firms from offering 3G roaming. DoT said they had not abided by the licensing rules while entering into agreements in 2011, which enabled them to sign up 3G customers “in any service area where at least one of the three had the required airwaves.”

"The current quarter-on-quarter revenue growth rate of 20% (combined for the three companies from 3G services) may go up to 25-30%," said Prashant Singhal, national telecom leader at Ernst & Young. It is assumed that operators will put in extra efforts to market 3G services and convert the existing 2G customers to 3G as the telcos will be in a position to offer the services even in those areas where they don't have 3G bandwidth.

This will lead to a huge increase in revenues as income from data services is growing faster than voice. Moreover, with a reduced capital and operational expenditure for 3G owing to the arrangement to share networks, profits will rise even further, analysts say.

The tribunal, while setting aside the ban, had also quashed the penalty of Rs 1,200 crore imposed on the companies by the telecom department.

In 2010, Bharti, Vodafone India and Idea Cellular had won 3G airwaves in 13, 9 and 11 circles, respectively. They also spent Rs 48,530 crore in February 2014 auctions to acquire airwaves supporting 2G and 3G services.

Mohammad Choudhury, executive director and telecom practice head at PwC India said that the roaming pacts would have a ‘significant impact’ on the telcos' Capex and cost of acquiring spectrum.