Telecom stocks mixed after TRAI ruling on call drops

Five telecom stocks saw mixed trend at 11:34 IST on BSE after TRAI mandated mobile operators to compensate the consumers in the event of dropped calls with effect from 1 January 2016.

Reliance Communications (up 2.24%), MTNL (up 0.26%), Tata Teleservices (Maharashtra) (up 4.95%) rose. Idea Cellular fell 2.62%

Bharti Airtel dropped 2.19% after the company said the agreement for sale of tower assets in Africa between Bharti Airtel Malawi Holdings B.V. and Eaton Towers (Lilongwe) has lapsed. The announcement was made before trading hours today, 16 October 2015.

On 8 September 2015, Bharti Airtel had announced its plan to sell more than 3,500 of its mobile towers in six African countries to telecommunications tower firm, Eaton Towers in a bid to reduce costs. Bharti Airtel had also said that it will lease back the towers from Eaton under a 10-year pact.

In a separate announcement after market hours yesterday, 15 October 2015, Bharti Airtel said that in the matter of 'CBI vs Shvamal Ghosh & Others,' the Special court has vide its order dated 15 October 2015 discharged Bharti Airtel and the other accused persons, on a finding that there is no incriminating material on record against the accused and the accused deserve to be discharged.

Meanwhile, the S&P BSE Sensex was down 42.36 points or 0.16% at 26,967.78

Telecom regulator Telecom Regulatory Authority of India (TRAI) today, 16 October 2015 mandated mobile operators to compensate the consumers in the event of dropped calls. The compensation to the consumers for call drops would become applicable from 1 January 2016 as the service providers would have to make suitable provisions in their systems, TRAI said in a press release issued today, 16 October 2015.

Call drop represents the service provider's inability to maintain a call once it has been correctly established i.e. calls dropped or interrupted prior to their normal completion by the user, the cause of the early termination being within the service provider's network.

In the past one year, consumers, at various fora, have raised the issue of call drops, complaining that their experience of making voice calls has deteriorated.

After careful examination of the comments received from the stakeholders and further analysis, TRAI has decided to put in place a mechanism to provide relief to consumers by mandating every originating service provider providing mobile services for each call drop within its network, the press release said.

As per TRAI, the originating service provider will compensate users with Re 1 for each call drop, limited to three dropped calls daily per user. The compensation for postpaid subscribers will be adjusted against the next monthly bill. The service provider will have to send details of dropped calls to the user within four hours of the occurrence of call drop and details of compensation through SMS.

TRAI is of the view that the mandated regime would provide relief to the consumers from the issue of call drops to some extent and spur the service providers to improve the quality of service, the press release said. TRAI will keep a close watch on the implementation of the mandate as well as the measures being initiated by the service providers to minimize the problem of dropped calls and may undertake a review after six months, if necessary, the press release said.

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