Dropped calls occur when a phone call is terminated unexpectedly as a result of technical reasons, including poor network signal.

Call drops happen because of inadequate coverage, quality of signal, including interference, network congestion and network failures. It happens when there is low or no signal.
Customers moving from a coverage area to a non-coverage one also experience call drops. Call drops frequently take place in trains.

Call drops happen mostly due to high inflow or outflow of calls from a single mobile tower. If a mobile tower is over-utilised, calls tend to drop.

The problem becomes more acute if mobile towers are overloaded with calls. Some calls are then dropped to accommodate the others.(from ibnlive.com)