Bank of America Merill Lynch (BofA-ML) has stated that the Telecom Regulatory Authority of India’s (TRAI) recommendation to compensate subscribers for call drops will impact earnings before interest, taxes, depreciation and amortisation (EBITDA) of telecom operators by up to 5 per cent. According to BofA-ML, Bharti Airtel and Idea Cellular could see the maximum impact of 4-5 per cent. However, it reckons that it will be difficult to implement the regulation in the current form and expects the operators to contest it.

 As per the norms issued by TRAI, subscribers will get a compensation of Re 1 for every dropped call from January 1, 2015. BofA-ML also contended an operator is not required to provide 100 per cent network coverage as per the licence norms. It also stated that the provision to compensate for call drop due to calling party’s network and not receiving party’s network is an issue.