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UBS Securities says call drop compensation doubtful in near term
Posted On Nov 07 2015
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Communications and IT Minister Ravi Shankar Prasad on Thursday said the penalty for call drops announced by the telecom regulator will be implemented as decided.
“The telecom operators may have a point”.
The report released by UBS Securities, it said, “we expect operators to take the legal route and challenge the Trai order”.
“While the industry is fully committed to resolving the problem, and work towards fulfillment of prime minister’s vision of Digital India, as a result of this regulation, operator’s ability to make further investments in expansion of service will come under severe pressure and hence will negatively impact PM’s vision of Digital India”, they added. Prasad met separately with Microsoft’s chief executive officer Satya Nadella, who was in Mumbai to celebrate 25 years of the technology giant’s operations in India.
According to the brokerage, there have been a lot of investor concerns about Trai’s proposal and its implementation could be “fairly hard”.
Announcing the compensation mechanism, details pertaining to call drop should be sent through SMS within four hours by the mobile operators. It said that Indian telecom firms do not have 100% geographical coverage. Telecom Regulatory Authority of India (Trai) last month mandated that telecom companies from January 1 should compensate users at the rate of Re 1 per dropped call, with a ceiling of three dropped calls per day (or, Rs 3 per day). UBS also said there is room for customers to manipulate call drops to collect the maximum compensation of Rs 3 a day from operators.
COAI, which represents GSM telecom players, had earlier said the regulation may force the industry to shell out about Rs 150 crore every day even if half of the consumer base in the country faces the call drop issue.
A call drop has been defined as “a voice call, which after being successfully established, is interrupted prior to its normal completion (and) the cause of early termination is within the network of the service provider”.
