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Thu, 17 Jul, 2014 12:01:00 AM FTimes-STT Report, July 17  Elisa's CEO Veli-Matti Mattila. Photo – Lehtikuva. The decision of the European Commission to reduce mobile phone roaming charges in the EU may have negative impacts on the local call tariff.
The EC has decided to cut the roaming call charges in the EU member states from July 1 this year.
According to Veli-Matti Mattila, chief executive officer of the Finnish telecommunications operating company Elisa, the roaming charge reduction may put pressure on mobile phone operating companies to increase prices domestically.
He, however, could not estimate the exact percentage of the domestic price increase due to the reduction in roaming charges.
Mattila pointed out that currently there is a huge price difference within Europe in terms of cost of calls, SMS and mobile data. The price in Finland, according to Mattila, is cheap.
“We will have to pay a higher price to a foreign operator for a Finn to use their network,” said the Elisa CEO, adding that the decision will affect the company profits in the short term but in long term it will have minimal effects.
Nordea analyst Sami Sarkamies also pointed out that all the three mobile operators in the country would have to raise their price at the same time.
An operator may decide to increase their market share by keeping their prices unchanged. In this case, other operators cannot raise their prices permanently.
“For sure, each Finnish operator would quickly have to raise their prices, because we cannot sell at a loss,” stated Sarkamies.
Elisa’s profits increased slightly up from the previous year. The profit before tax in April-June amounted to 67 million euros, up from 63 million euros in the corresponding period of previous year.
Photo – Lehtikuva. The revenue remained almost at last year’s level at 384 million euros.
According to Mattila, interest in high-speed 4G data connections has increased significantly. Currently 54 per cent of Elisa customers use smart phones.
From the beginning of July, the cost of making a call has been capped at 19 cents. The previous cost per minute was 24 cents.
The cost of receiving a call is now capped at 5 cents, down from 7 cents.
The maximum cost of sending a text message is capped at 6 cents compared to the previous cap cost of 8 cents.
The cost of downloading data has also been cut from the current price cap of 45 cents per megabyte to 20 cents.
It is estimated that the EU could do away with roaming charges the earliest in 2016.
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