International roaming rates set to crash as telcos fight voice over internet

International roaming rates are set to crash with Indian telecom companies expected to follow Vodafone's lead by slashing charges in order to ward off the threat posed by over-the-top (OTT) services like Skype and Google Hangout that offer free voice calling over internet.

On Monday, Vodafone India, the country's second largest mobile phone operator, slashed international roaming rates for both pre- and post-paid customers by up to 78 per cent for calls and by 95 per cent for data.

Vodafone had cut international roaming rates by 60 per cent in June 2012. The latest move comes days after rival Reliance Communications offered discounted roaming in the US.

Idea Cellular, the country's third-biggest GSM player, already offers highly competitive packages for countries like the US.

Idea had warned that services such as international calls and SMSs were taking a hit from OTT players who offer free voice calling or ones such as WhatsApp and WeChat that provide free messaging services.

Telecom research firm Mobile Squared and Tyntec, an intermediary between operators and OTT services, said Skype, which offers free calls using the internet, is costing the global telecom industry $100 million per day and a staggering $36.5 billion per year.

On Monday, Vodafone said it is launching two international roaming packs with rentals of Rs599 and Rs1,499, which have a validity of 10 and 30 days respectively.

The packs, which will work in 53 countries, including the US, UK, Singapore, Thailand and the UAE, come with outgoing local and international call tariff of Rs15 a minute and Rs30 a minute, respectively - a discount of almost 78 per cent over the existing tariffs, Vodafone said.

Incoming calls will cost Rs30 a minute, which is less than half the current rate.

The new tariff cuts bring local and domestic long-distance and roaming charges to as low as one paisa per second.

While other operators have not so far announced any rate cuts, analysts say they are bound to follow and will announce revised rates soon.

Telecom operators had earlier refused to lower international roaming rates citing tie-ups with foreign players. But consumers opted to shift to international SIM providers using new technologies.

Vodafone India said its consumer insights suggested that customers were willing to use roaming given the right value proposition and a worryfree a fixed bill. It also found that 35 per cent spends of customers use alternate India numbers to roam.

For the quarter ended 30 September, Idea Cellular saw a nearly 7 per cent sequential drop in its total international minutes.

Bharti Airtel's international minutes in the quarter that ended 30 June fell to 2.89 billion from 3.79 billion minutes in the previous quarter, while Reliance Communications' international minutes dropped nearly 10 per cent quarter on quarter in the same period.

Operators on average charge Rs6-7 a minute for calling overseas while an internet call reduces that to less than a rupee.

International roaming accounts for a meagre 5 per cent of the revenue of telecom operators, but it is highly profitable or them.