1. Reliance Jio row: Airtel, Vodafone, Idea accuse Trai of favouring one operator after IUC charge slashed

Reliance Jio row: Airtel, Vodafone, Idea accuse Trai of favouring one operator after IUC charge slashed

Shares of Bharti during the day fell by 6.25% to Rs 370 but finally recovered to end with a marginal gain of 0.39% at Rs 396.25 apiece on the BSE. The Idea Cellular scrip too fell during the day by 7.4% to Rs 76.85 before recovering to finally close 3.43% down at Rs 80.15.

By: | New Delhi/mumbai | Updated: September 21, 2017 6:44 AM
A day after the Telecom Regulatory Authority of India (Trai) cut the mobile termination rate by a huge 57% to 6 paise per minute and said it would become zero from 2020, incumbent operators expressed their unhappiness and slammed the regulator for the move, stating in no uncertain terms that the move would benefit only one operator (Reliance Jio) and worsen the fiscal health of the stressed industry. (Reuters)

A day after the Telecom Regulatory Authority of India (Trai) cut the mobile termination rate by a huge 57% to 6 paise per minute and said it would become zero from 2020, incumbent operators expressed their unhappiness and slammed the regulator for the move, stating in no uncertain terms that the move would benefit only one operator (Reliance Jio) and worsen the fiscal health of the stressed industry. They also indicated they would move court. The market, which had factored in a cut but a lower quantum, pulled down the shares of incumbents like Bharti Airtel and Idea Cellular by as much as 6-7% in intra-day trade.

Shares of Bharti during the day fell by 6.25% to Rs 370 but finally recovered to end with a marginal gain of 0.39% at Rs 396.25 apiece on the BSE. The Idea Cellular scrip too fell during the day by 7.4% to Rs 76.85 before recovering to finally close 3.43% down at Rs 80.15. Quite to the contrary, shares of Reliance Industries rose by 0.85% to Rs 847.10 each, while intra-day it gained 3.82% to Rs 872.10, a 52-week high. Criticising Trai’s move, Bharti in a statement said, “The suggested IUC (interconnect usage charges) rate, which has been arrived at in a completely non-transparent fashion, benefits only one operator which enjoys a huge traffic asymmetry in its favour.” Expressing disappointment at the new regulations, it said the industry is facing severe financial stress and the cut in the IUC will “further” worsen the situation. “As part of an industry which continues to be a critical driving force behind the economic growth in the country, we are genuinely dismayed by this decision,” the company said.

Vodafone termed Trai’s decision as a “retrograde regulatory measure”. It alleged that the move will significantly benefit the new entrant alone and would adversely affect the rest of the industry. In a note, brokerage firm Kotak Institutional Equities said that the strong arguments in favour of the bill and keep model that Trai has put forth in the announced mobile termination rate cut regulatory document is a much bigger negative than the quantum of the cut. “We see this development as the second instance of the incumbents being unable to get their (logical, to us) view on an important regulatory development accepted. The first instance was renewal of extant spectrum.” On Jio, Kotak noted that at a per-consumer level, on a 100-million subscriber base, a saving of $550-600 million translates into roughly Rs 30-33 per subscriber per month. “Whether Jio retains the benefit or chooses to pass on some or all of it to the consumer is tough to say. However, that this move by Trai opens up the possibility of Jio becoming more aggressive is a clear negative for incumbents in our view.”

Meanwhile, in a statement Jio slammed the incumbents and denied that the cut would bring any benefit to it. “The implementation of bill & keep regime will help in making services more affordable for Indian customers. Jio has always offered free voice services to its customers. There is no question of any advantage from the new IUC regulation to Jio as it has already passed on all the benefits to customers. We deny any benefits to Jio.” Slamming the incumbents, it said, “It is appalling that the incumbent operators have still gone ahead and made untrue and baseless allegations against the process for determination of IUC or the regulator. The incumbent operators have a history of opposing all the IUC regulations over the last eight years, but have not been successful in thwarting passing of the benefits of lower IUC to customers.”

  1. S
    Shankar
    Sep 21, 2017 at 8:48 am
    Well of course its payback time for the govt to their election financiers , defence and mining deals to ambanis and adanis is all a part of payback
    Reply

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