INDIA BUSINESS WORLD - JUNE - JULY - 2007
The Month that was ...

BSNL TO SLASH ROAMING RATES FOR TOURISTS BY 40%

AFTER price wars over domestic roaming rates, BSNL is set to take the battle to tourists visiting India. Starting July, BSNL will slash international roaming tariffs by 40% for tourists using its network in India. State-owned MTNL, which offers telecom services in Mumbai and Delhi is likely to follow suit. The move will also put pressure on private operators such as Bharti Airtel and Hutchison-Essar to reduce international roaming tariffs. Industry sources estimate that GSM operators earn about Rs 3,000 crore annually from tourists visiting India.

A source said that BSNL's market share in this segment (foreign tourists on international roaming) is less than Rs 100 crore annually and the tariff reduction is aimed at maximising revenues. Bharti and HEL account for a significant bulk of the Rs 3,000 crore that GSM operators rake in from international tourists.

Currently, if a customer from an European operator were to use BSNL's network while on roaming in India, the average tariff is about Rs 50 per minute for an outgoing local or STD call, Rs 99 per minute for an outgoing ISD call and Rs 75 per minute for an incoming call.

"From July 1, for tourists from abroad, the tariffs for outgoing local/STD call will be slashed to about Rs 30 per minute, while an outgoing ISD call will cost Rs 70 per minute and an incoming call Rs 50 per minute - this is up to 40% reduction from the current tariffs," said a source. "Many tourists use calling cards while in India. We feel that we can make inroads into this segment by slashing our tariffs. Besides, BSNL has the widest network coverage and present along all major highways and rail routes - this factor will work to our advantage," the source explained.

BSNL subscribers travelling outside India will also get a reduction in the existing surcharge on their roaming tariffs by 5%. Currently, the company charges a surcharge of 15%. BSNL is looking at increasing revenues as its market share in the mobile space is declining. The company has almost runout of network capacity for expanding services. This has led to the PSU planning to appoint a consultant to improve its business processes to 'compete effectively with private players'.

HEL became the second largest GSM player in the country displacing BSNL after it recorded a 5.4% growth in subscriber base in May 2007, ( it added over 1.5 million subscribers while BSNL added 0.24 million). The PSU has not undertaken any major network expansion since October 2005. This has led to regional players like Idea Cellular, which has operations in just 11 circles, overtaking it in terms of subscriber addition.