TRAI decision disappoints major telecom players

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TRAI decision disappoints major telecom players

Reliance Jio, which started its commercial operation a year ago, has been offering customers voice calls at no charge from day one.

This means if an Airtel customer calls a Vodafone subscriber, then Airtel will have to pay termination charge to Vodafone.

"On the basis of comments received from stakeholders, in writing or during the open house discussion or during the workshop, the Authority has prescribed revised domestic mobile termination charges through these regulations", Trai said in the statement. Last month, Vodafone chief executive Vittorio Colao urged the regulators to not fulfil all of Reliance Jio's demands. While Airtel is the largest telecom operator in terms of subscribers and revenue, Reliance Jio has emerged as the top 4G operator by adding 130 million 4G subscribers in almost 12 months. On the other hand, other operators like Bharti Airtel, Vodafone and Idea Cellular are likely to take a hit.

This came as a big blow to older telecom firms, such as Bharti Airtel Ltd, Vodafone India and Idea Cellular ltd, and turned out to be a potential boost to newcomer Reliance Jio Infocomm Ltd.

TRAI Slashes IUC By 57%. There are no clear answers.

IUC had been the bone of contention between various telecom operators, but eventually, consumers prevailed as the ultimate winners. Trai believes that reduction of these charges would benefit the customers a lot. A few years ago, they would have bumped voice and data tariffs. In short, the chances of tariffs going down seem improbable. Similarly, the IUC is a relic of the era before telecom moved to packet data technology and relied on platforms where chunks of bandwidth were blocked when calls were made.

Larger players like BhartiAirtel and Idea typically have a significantly higher traffic of incoming calls than outgoing, according to a report by Kotak Institutional Equities. Vodafone India received equity infusion of Rs 47,700 crore from its parent Vodafone Group past year - the highest FDI investment in India till date - to buy additional spectrum and to upgrade networks.

Mr. Jagnani further adds, "At a time when there are talks of providing incentives to the industry, which is ailing with pressure on profitability, elevated debt levels, and continued capex requirements, the timing of this reduction in IUC would add to the woes of the industry". Does that make IUC charges redundant? "This move is likely to keep the competitive intensity for the industry high and prolong the restoration of pricing power, a must for all operators to generate adequate return on investments". Incumbent operators say that lower IUC charges will impact them as their existing cost structures are built around income from IUC as well.

He added that the telcos would want "details used to arrive at the 6 paise figure".

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